Indian banks will face heat of second Covid wave in H1 of FY22: S&P

Credit losses should remain high at 2.2 per cent before recovering to 1.8 per cent, says rating agency.

Indian banks face systemic risks as the country wades through the aftermath of the Covid-19 second wave. The banking sector's weak loans are likely to remain elevated at 11-12 per cent of gross loans in the next 12-18 months, according to Standard and Poor's (S&P).

The second wave will impair the performance of Indian financial institutions in the first half of fiscal 2022, with much resting on the effectiveness of government measures to address this problem.

Credit losses should remain high at 2.2 per cent before recovering to 1.8 per cent in the year ending March 2023. Lenders struggled with a high