Categories: India

India's banking sector recovery to pre-Covid levels may take years: S&P

India’s banking system will be one of the last to recover from disorders caused by the covid-19 pandemic, a report by S&P Global Ratings said.

The covid-19 pandemic has hit the Indian Economy at a time when growth was lowest in a decade. The coronavirus outbreak will now impact the recovery process, the report said.

Banking systems in India, Mexico and South Africa among others will be slow to recover and could even take beyond 2023 get back to the pre-Covid 2019 levels, the report added.

Covid-19 and the global oil price shock have taken a heavy toll on global banks. "S&P Global Ratings has taken 335 negative rating actions globally since the outbreak began, and we anticipate it will be difficult for the financial strength ratings on financial institutions to return to pre-crisis levels. 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 agency said.

"We have taken negative rating actions on Indian banks and NBFIs as operating conditions have deteriorated through the crisis. The country entered the pandemic with an overhang of high non-performing assets," it added.

The rating agency warned that there will be much uncertainty on the recovery path. Banking sector recovery will not just depend on the economic recovery occurring broadly in accordance with the base case, but also on the nature and extent of the economic damage affecting firms and households prior to the onset of the economic recovery.

"Already, we forecast credit losses of about $2.1  trillion for 2020 and 2021 for the global banking sector, spurred by the pandemic," it said.

The hit on financial institutions globally has been unambiguously negative. "Our negative rating actions since March 1, 2020, to September 7, 2020, include 234 rating actions on banks and 101 rating actions on nonbank financial institutions (NBFIs). Most rating changes are outlook revisions (236, or 70 per cent of total rating actions). Rating downgrades and negative CreditWatch placements account for the remainder," the agency said.

 .

AddThis Website Tools
indianarrative

Recent Posts

All visa applications treated on merit basis, MEA on US visa issues for Indian nationalsAll visa applications treated on merit basis, MEA on US visa issues for Indian nationals

All visa applications treated on merit basis, MEA on US visa issues for Indian nationals

The Ministry of External Affairs (MEA) has taken note of the new guidelines issued by…

6 hours ago
“India’s concern on terrorism was not acceptable to one country’: MEA on Rajnath Singh refusal to sign SCO joint statement“India’s concern on terrorism was not acceptable to one country’: MEA on Rajnath Singh refusal to sign SCO joint statement

“India’s concern on terrorism was not acceptable to one country’: MEA on Rajnath Singh refusal to sign SCO joint statement

The Ministry of External Affairs on Thursday said India refused to sign the joint declaration…

6 hours ago
India evacuated 3,426 Indian nationals from Iran, 818 from Israel in Operation Sindhu: MEAIndia evacuated 3,426 Indian nationals from Iran, 818 from Israel in Operation Sindhu: MEA

India evacuated 3,426 Indian nationals from Iran, 818 from Israel in Operation Sindhu: MEA

The Ministry of External Affairs spokesperson Randhir Jaiswal said that India, so far have evacuated…

7 hours ago

Axiom-4 piloted by Group Captain Shukla docks successfully at International Space Station

Axiom 4 mission aboard the SpaceX Dragon spacecraft successfully docked at the International Space Station…

8 hours ago

First Kashmiri-Kannada film ‘Harmukh’ captivates audience in Srinagar

In a significant moment for regional cinema and cultural dialogue, the premiere of 'Harmukh', the…

9 hours ago

“Language is the soul of a nation, not just a medium of communication,” says Union Minister Amit Shah

Union Home Minister Amit Shah on Thursday said that languages were not just a medium…

10 hours ago