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Indian banks' asset quality is likely to weaken further, with stressed assets (including non-performing loans and restructured loans) to rise from 10 per cent (at mid-2013) to around 15 per cent during FY15 (by March 2015), said Fitch Ratings.
In its Emerging Market Banking System Datawatch report, Fitch said State-run banks are most affected and may need Rs 3.8 lakh crore ($60 billion) of new equity by 2019 to achieve full compliance with Basel rules, although delayed implementation has reduced near-term capital pressure.
In most other major EM Asia markets, Fitch is less concerned about loan seasoning given banks' significant buffers.
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