MUMBAI: Indian banks will see their asset quality deteriorate by 200-600 basis points (bps) for at least the next two years due to increased lending pressure to revive the credit flow in the economy, Fitch Ratings said on Thursday.
The rating agency, in a report, said recent Reserve Bank of India (RBI) measures, including an extension of the 90-day moratorium on recognition of impaired loans and allowing banks to fund interest on working-capital loans, will put a heavy onus, particularly on state-owned banks, to bail out affected sectors. "The nationwide lockdown to contain the spread of coronavirus has taken a severe toll on businesses, supply chains and individual incomes.