Fitch Ratings on Monday said that despite better financial performance, Indian banks’ risk appetite through high loan growth will remain an important factor in their creditworthiness. The agency said in a report that asset quality pressure is reducing since the last loan cycle, creating a favorable business environment. This has increased banks’ capacity and desire for growth. According to language news, bank credit in the financial year 2023-24 increased by 16 percent as compared to the financial year 2022-23.
Fizz’s opinion on government and private banks
According to the news, this bank loan is more than eight percent CAGR (compound annual growth rate) compared to financial years 2014-15 and 2021-22. Large private banks gained significant market share in the last loan cycle and continued to grow rapidly, the agency said in its report ‘Impact of risk appetite on Viability Ratings of Indian banks despite better performance’. Government banks also returned to the path of rapid growth but big private banks lagged behind.
India’s domestic debt is the lowest in the world
Fitch said India’s household debt is among the lowest in the world, despite rising from 38 percent to about 40 percent of GDP in fiscal year 2022-23. The Reserve Bank of India (RBI) noted concerns about a decline in the household savings rate, initial defaults, high loans per borrower (43 per cent of consumption loan borrowers had three ‘live’ loans) and an increase in consumption loans, the agency said. Has expressed. Even though secured loans dominate the loan books of banks.
Fitch Ratings says banks’ interest in SME and agricultural loans is also increasing. Banks often rely on government guarantees to mitigate risk in SME loans, but there is scope for better visibility over the risks covered by these guarantees.
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