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India Ratings and Research on Monday said it has revised its outlook on the overall banking sector to stable for 2021-22 from negative.
“This is because substantial systemic measures have reduced the system-wide Covid-19 linked stress below the expected levels. Banks have also strengthened their financials by raising capital and building provision buffers,” it said in a statement.
The agency has upgraded its credit growth estimates for the current fiscal to 6.9 per cent from 1.8 per cent and 8.9 per cent in the next fiscal. This is due to the improvement in the economic environment in the second half of the fiscal year and the Centre’s focus on higher spending especially on infrastructure.
India Ratings estimates gross non performing assets at 8.8 per cent in the current fiscal and 10.1 per cent next fiscal and stressed assets at 10.9 per cent.
Provisioning cost has fallen from its earlier estimate of 2.3 per cent for 2020-21 to 2.1 per cent (including Covid-19 linked provisions) and is estimated at 1.5 per cent for next fiscal.
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