The rating agency has kept its FY22 credit growth estimates unchanged at 8.9% for FY22, supported by a pick-up in economic activity post Q1 FY22.

• Domestic rating agency India Ratings on Tuesday maintained a stable outlook on the banking sector for 2021-22 while it expects an increase in stressed assets in retail and MSME segments by end-March.
• It estimates gross non-performing assets (GNPA) of the banking sector to be at 8.6% and stressed assets at 10.3% for fiscal 2021-22.
• The agency has a negative outlook on five banks (about 6.5% of system deposits), driven primarily by weak capital buffers and continued pressure on franchise.
• It estimates that the asset quality impact in the retail segment has been higher for private banks with a median rise of over 100% in gross NPAs over Q1 FY21 to Q1 FY22 (about 45% for PSBs).

India Ratings and Research (Ind-Ra) is India's most respected credit rating agency committed to providing India's credit markets accurate, timely and prospective credit opinions.                                                                    

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