COVID-19 impact | Indian banking system will be one of the slowest to recover: S&P

The Indian banking system will be one of the slowest to return to 2019 levels, and full recovery might stretch beyond 2023, according to a report by S&P Global Ratings.

"For India, Mexico, and South Africa, a recovery to pre-COVID-19 levels may not arrive until after 2023," S&P said in its report on global banking.

Major banking systems, such as the US, UK, France, Germany, Spain, Italy, Japan, Australia, Brazil, Indonesia, and Russia, are also unlikely to recover until 2023.

In its report, S&P said it doesn't expect the banking systems in many countries to see a full recovery before 2022.

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"We don't expect the world's largest banking sectors, including more than half of G20's, to recover to pre-COVID-19 levels until 2023, or beyond."

The report said the COVID-19 pandemic and plunge in oil prices has hurt banks across the globe, the report said.

"Even for less-affected banking jurisdictions, recovery to pre-COVID-19 levels will unlikely come before end-2022. These jurisdictions include China, Canada, Singapore, Hong Kong, South Korea and Saudi Arabia," the report added.

According to S&P, recovery for banks in emerging markets, including India, will be more painful. Banks in such countries might even see sharp credit losses in 2020.

"The path to recovery will be more painful for emerging markets such as India. The banks' recovery to long-term averages for key asset quality and profitability ratios will take years," the report said.

In an earlier report, S&P had already forecast credit losses of around $2.1 trillion for 2020 and 2021 for the global banking sector, due to the economic fallout of the pandemic.