Bad Loans May Continue to Haunt Banks: Moody's
MUMBAI: Bad loans may continue to haunt Indian banks, according to global credit rating agency Moody’s.
An investor poll showed that global fund managers expect moderation in fresh slippages of Indian banks, however, their woes from problem loans are unlikely to go away anytime soon, said Moody’s
“The majority of respondents expected no significant increases in the capital levels of Indian state-owned banks over the next two years. They are also not optimistic about progress to improve creditor rights of banks over the next three years. Indian state-owned banks have little capacity to improve their generally weak capital buffers through retained earnings. The external capital infusion - including from the government - is likely to remain scarce,” it added.
As on March 2014, all scheduled commercial banks, including private and foreign banks, together had Rs 2,64,194 crore worth bad loans. Of this, PSBs accounted for Rs 2,28,073 crore. In the following nine months, this rose to Rs 2,60,531 crore.
Meanwhile, the investor poll on Asian banks showed that the unwinding of asset bubbles is the top macroeconomic threat in the coming 12 months, followed by a growth slowdown in China. Property prices have appreciated particularly rapidly in Hong Kong (Aa1 stable), India (Baa3 positive), Malaysia (A3 positive) and Singapore (Aaa stable) since the 2008-09 global financial crisis, it said.