Indian banks will be able to withstand rising asset risks, says Moody's

India's second Coronavirus (Covid-19) wave is increasing asset risks for banks in retail and the SME loan segement. However, factors like tight credit underwriting, strong loss provisions will help banks withstand pressures and prevent a sharp rise in bad loans, according to rating agency Moodys.

The rating agency in a statement said that banks' improved profitability, capital and loss buffers will help them absorb anticipated loan losses and maintain credit strength. Also, the country's economic recovery and continued government support will prevent a sharp spike in problem loans.

Moody's baseline expectation is that newly formed non-performing loans (NPLs) at public