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

India stresses free Indo-Pacific, joint action on terror at EAS meet in MalaysiaIndia stresses free Indo-Pacific, joint action on terror at EAS meet in Malaysia

India stresses free Indo-Pacific, joint action on terror at EAS meet in Malaysia

Secretary (East) P. Kumaran led the Indian delegation at the East Asia Summit (EAS) Senior…

42 minutes ago
“Terrorism will eventually come back to haunt you,” says Jaishankar, urges global community to look beyond India-Pakistan lens on Kashmir attack“Terrorism will eventually come back to haunt you,” says Jaishankar, urges global community to look beyond India-Pakistan lens on Kashmir attack

“Terrorism will eventually come back to haunt you,” says Jaishankar, urges global community to look beyond India-Pakistan lens on Kashmir attack

Indian External Affairs Minister S. Jaishankar, during his visit to Brussels this week, met European…

2 hours ago
Taiwanese NGOs hold 2030 wargame exercise simulating Chinese naval incursionTaiwanese NGOs hold 2030 wargame exercise simulating Chinese naval incursion

Taiwanese NGOs hold 2030 wargame exercise simulating Chinese naval incursion

Three Taiwanese non-governmental organisations participated in a tabletop exercise on Tuesday that simulated dramatic escalations…

3 hours ago

Russia, Ukraine swap prisoners under Istanbul agreement

A second group of Russian prisoners of war (POWs) has been released from Ukrainian captivity…

3 hours ago

Taiwan thanks Indian Navy, Coast Guard for swift rescue of Wan Hai 503 crew

The Taiwan Government has expressed gratitude to the Indian Navy and Indian Coast Guard for…

3 hours ago

India and Malaysia hold 10th Navy-to-Navy Staff talks in Kuala Lumpur to boost maritime cooperation

The Indian Navy delegation, led by Rear Admiral Shantanu Jha, NM, participated in the 10th…

5 hours ago