 "stressed sectors")
The Reserve Bank of India's (RBI) forbearance towards the stressed sectors marks a gradual shift from its earlier effort to enhance the quality and transparency of asset classification. Fitch Ratings says such regulatory forbearance will perpetuate moral hazard as it comes on the back of aggressive lending to certain sectors in the five years to FY19.
The RBI has announced an extension of the one-time restructuring scheme for micro, small and medium-sized enterprises (MSMEs) and in asset classification for certain real-estate projects. While it is not clear if the forbearance will be extended to non-banking financial companies, Fitch believes the probability
