MUMBAI: The 21-day nationwide lockdown to contain the spread of coronavirus (covid-19) leading to sluggish economic growth and the consequent rise in provisions for bad loans will exert pressure on the capital adequacy of banks, ratings agencies have warned.
The impact will be more pronounced for public-sector banks (PSBs), where the Centre has not proposed any capital infusion for the financial year started 1 April and expects them to tap markets for funds.
Ratings agency Moody’s Investors Service went to the extent of revising the outlook for the Indian banking system to negative from stable earlier.
According to Moody’s, surge in loan loss provision along with a decline in revenue will hurt the profitability of banks, causing a