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Banks in India to see capital decline over 2 years without fresh infusion: Moody's

In India, stress among non-bank financial institutions will also curtail their capacity to lend, Moody's noted.

November 30, 2020 / 03:09 PM IST
Representative Image

Representative Image

Moody's Investors Service on November 30 said the bank capital will moderately fall in emerging Asia over the next two years, with India seeing larger capital decline without further infusion.

In a report, Moody's said the uncertain trajectory of asset quality is one of the biggest threats for emerging market banks, as operating conditions remain challenging amid the current COVID pandemic.

The 2021 outlook for banks in emerging markets is negative, while the outlook for insurers is stable, it said.

"In the Asia Pacific region, banks' rising nonperforming loans and insurers' volatile investment portfolios are in focus. Capital will moderately fall in emerging Asia over the next two years, and banks in India and Sri Lanka will post larger capital declines without public or private injections," Moody's said.