'Risk Profile Weighs On Indian Banks': Fitch Ratings Signs Caution

'Risk Profile Weighs On Indian Banks': Fitch Ratings Signs Caution

Retail loans constitute around 10 per cent of system loans, and grew at a 20 per cent CAGR since FY21, fuelled by a shift towards unsecured credit to expand margins, the US-based rating firm said.

PTIUpdated: Monday, May 13, 2024, 11:57 AM IST
article-image
/Fitch Ratings |

Fitch Ratings on Monday said Indian banks' risk appetite through higher loan growth will remain a key consideration for their creditworthiness despite improved financial performance.

Bolstered Bank WIth Appetite For Growth

It said asset quality pressures from the previous credit cycle are subsiding, creating a favourable business environment. This has bolstered banks' potential and appetite for growth.

Bank loans grew by 16 per cent in the financial year ended March 2024, similar to FY23, exceeding the 8 per cent CAGR (compound annual growth rate) over FY15-FY22.

Retail loans constitute around 10 per cent of system loans, and grew at a 20 per cent CAGR since FY21, fuelled by a shift towards unsecured credit to expand margins, the US-based rating firm said.

Fitch said India's household debt is among the lowest in the world, despite rising to around 40 per cent of GDP from 38 per cent in FY23.

Fitch said India's household debt is among the lowest in the world, despite rising to around 40 per cent of GDP from 38 per cent in FY23. | FP Pics

Large Private Banks Fall Behind

Large private banks gained significant market share in the last credit cycle and continue to grow rapidly; state banks also returned to brisk growth but lagged large private banks, Fitch said in a report titled 'Risk profile weighs on Indian banks' viability ratings despite improved performance'.

Fitch said India's household debt is among the lowest in the world, despite rising to around 40 per cent of GDP from 38 per cent in FY23.

"Nonetheless, the Reserve Bank of India (RBI) has expressed concerns regarding the fall in the household savings rate, early delinquencies, higher loans per borrower (43 per cent of consumption loan borrowers had three live loans), and surge in consumption loans, even though secured loans dominate banks' loan books," Fitch said.

RECENT STORIES

'₹50,000 A Month': Do Zomato & Swiggy Delivery Agents Earn More Than Software Engineers? Check To...

'₹50,000 A Month': Do Zomato & Swiggy Delivery Agents Earn More Than Software Engineers? Check To...

AMD Leverages AI To Shape Next-Gen Computing Experience; Eyes Emerging Markets

AMD Leverages AI To Shape Next-Gen Computing Experience; Eyes Emerging Markets

'Everyone Is A Taxpayer': Female Ethiopian Airlines Passenger Protests After Being Kicked Out Of...

'Everyone Is A Taxpayer': Female Ethiopian Airlines Passenger Protests After Being Kicked Out Of...

India Saw 54 Land Deals For 1,045 Acres In 1st Half Of 2024, Bengaluru Leads Mumbai

India Saw 54 Land Deals For 1,045 Acres In 1st Half Of 2024, Bengaluru Leads Mumbai

Mission ₹17,000 Crore: Mother Dairy Aims To Expand Turnover In FY25 On Better Demand: MD

Mission ₹17,000 Crore: Mother Dairy Aims To Expand Turnover In FY25 On Better Demand: MD