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Moody’s Sees NPL Ratio Holding at 2–3% as Nifty Bank Index Peaks Ahead of RBI Meeting

Domestic spending measures fuel bank resilience ahead of a potential RBI rate cut.

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File Photo: IANS
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Overview

  • A June 3 Moody’s report forecasts that Indian banks will keep their non-performing loan ratio between 2 percent and 3 percent over the next year.
  • Government capital expenditure, tax relief and monetary easing are expected to underpin credit quality across the banking sector.
  • The Reserve Bank of India’s higher risk weights on unsecured retail loans and non-bank finance company exposures have slowed growth in higher-risk segments.
  • Moody’s flags rising impairments in unsecured retail and microfinance loans, with two-wheeler financing particularly vulnerable to delinquencies.
  • The Nifty Bank index hit a record on June 3 as investors weighed supportive policy measures ahead of the RBI’s Monetary Policy Committee decision.