India Ratings upgrades outlook on banking sector to 'improving' for FY23

Key financial metrics are likely to continue to show improvement in FY23, backed by strengthened balance sheets, an improving credit demand outlook and expected commencement of corporate capex cycle.

India Ratings and Research (Ind-Ra) has revised the outlook on the Indian banking sector from "stable" to "improving" for FY23 as its health is at its best in decades. The improving health trend that began in FY20 is likely to continue into the next financial year ( FY23).

Furthermore, key financial metrics are likely to continue to show improvement in FY23, backed by strengthened balance sheets, an improving credit demand outlook and expected commencement of the corporate capex cycle.

While the tightening liquidity would push up interest rates, impacting treasury gains, it would be partially offset in the short term