Banks' credit costs to stay at 2-3% till FY20, says India Ratings

The rating agency has kept a stable outlook for private banks and two PSBs - SBI and Bank of Baroda. The outlook for the rest of the PSBs remains negative

Banks will continue to see their credit costs (amount set aside for bad loans) stay at 2-3 per cent in FY19 and FY20 because of ageing toxic assets and accelerated provisioning. The slippages from non-corporate loan book covering farming, small, micro enterprises and retail segments will also add to provisions, according to rating agency India Ratings and Research.  

The need to provide for assets under new accounting standards (IndAs), if implemented from FY20 onwards, has also decreased to about Rs 0.3 trillion from Rs 0.87 trillion. Banks have already incurred the substantial credit costs in FY18. Most of the impact