International ranking company Moody’s on Tuesday mentioned at the same time as international commerce tensions pose dangers for the worldwide financial system, the Indian banking sector will be capable to broadly protect asset high quality, as home financial circumstances stay supportive for development. It added that the divergence of mortgage efficiency will stay throughout totally different product varieties and lenders.
“We count on the system-wide NPL (non-performing loans) ratio to stay at 2-3 per cent within the subsequent 12 months, in comparison with 2.5 per cent on the finish of December 2024,” it mentioned. In FY25, lenders noticed greater slippages within the unsecured mortgage segments of bank cards, private loans and microfinance loans, consultants say.
The asset high quality of auto loans, Moody’s says, will weaken in some pockets as pent-up demand for autos publish Covid pandemic dissipates, and loans mature. Significantly, delinquencies have elevated for two-wheeler loans, that are extra susceptible than these for passenger or business four-wheelers, as youthful debtors with decrease revenue and nascent credit score habits account for a big proportion for the previous sort.
Impairments of unsecured retail loans, together with microfinance loans for low-income households, may even stay at a excessive stage within the subsequent few quarters, it mentioned.
Credit score development
Additional, the RBI’s macro-prudential measures have prevented extreme mortgage development within the banking system, Moody’s mentioned. In April, the RBI issued draft tips to curb dangers from loans towards gold, which have additionally expanded briskly amid hovering gold costs.
“We count on these measures to sluggish the expansion of this mortgage phase. We count on system-wide loans to develop 11-13 per cent within the fiscal yr ending in March 2026, in comparison with a mean of 17 per cent for March 2022-March 2024,” Moody’s mentioned.
Printed on June 3, 2025
