MUMBAI : The slow growth in credit amidst the Covid-19 pandemic and an already slowing economy will add to profitability pressures for banks and create additional asset quality stress, said a report by rating agency Icra on Wednesday.
Icra said that while a loan repayment moratorium, if provided by the Reserve Bank of India (RBI), could assuage asset quality concerns, the inherent stress will keep building up.
Moreover, while bank repayment schedule can get extended, the report said, debt capital market instruments unlikely to be rescheduled. “Borrower leverage is likely to go up with additional working capital requirements and profitability pressures, but credit growth to remain slow amid muted economic activity, likely to remain below 6%