According to S&P Global Ratings, India’s economic development prospects should remain high in the medium term, with GDP increasing 6-7.1% yearly in fiscal years 2024-2026.
S&P stated in a report titled ‘Global Banks Country-By-Country Outlook 2024’ that the banking sector’s weak loans will fall to 3-3.5% of gross advances by March 31, 2025, owing to structural improvements such as healthy corporate balance sheets, tighter underwriting standards, and improved risk-management practises. Interest rates in India are unlikely to rise much, which should limit the risk for the banking industry, according to the report.
S&P Primary Credit Analyst Ms. Deepali Seth Chhabria said,” Unsecured personal loans have grown rapidly and could contribute to incremental NPLs. We believe underwriting standards for retail loans generally remain healthy and overall level of delinquencies remains within acceptable limits for this product category”.
According to the study, global uncertainty would have a lower influence on the Indian economy. Slower global growth and external demand will weigh on economic activity and may drive up inflation further. However, given that India is domestically oriented, the agency anticipates economic growth to be less harmed, it added.
According to the report by S&P, “Economic growth momentum to continue. India’s economic growth prospects should remain strong over the medium term, with GDP expanding 6-7.1% annually in fiscal years 2024-2026”.
In the June quarter, India’s real GDP increased by 7.8% year on year, up from 6.1% in the March quarter. The Reserve Bank of India forecasts 6.5% economic growth for fiscal years 2023-24 and 2024-25.
According to the report, the State Bank of India and the top private-sector banks have essentially addressed their asset-quality issues. Many public-sector banks continue to hold relatively significant amounts of risky assets, which will result in higher credit losses and lower profitability; their performance trails that of the industry.
