Despite the improvement of the execution of banks in the second quarter of the financial year 2022, the threat of the third wave of CVIV-19 infections poses a high risk for their quality of assets, said a study.
Currently, standard restructured bank loans are estimated at 2.9% of standard progress, the ICRA rating agency has reported in a report.
The restructured loan book includes borrowers affected by the first and second waves of the Covid-19 pandemic. Typically, banks provide a 12-month moratorium period to restructure loans.
As a result, the current book should begin to leave the fourth quarter of this tax and the first quarter of fiscal 20123. As a result, a third wave of possible infections could disrupt the performance of borrowers and pose a risk to improve The trend towards profitability and solvency, declared ICRA.
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Banks will retain the estimation of credit growth from 7.3 to 8.3% for the ORCA, ICRA said. Until December 4, bank credit increased by 7.4% in the third quarter, compared with 5.5% during the 2012 fiscal year.
At the end of the year 2023, the credit of the banks will be 7.7 to 8.6%, with increased growth potential if the business request responds in the second half of the previous year, announced the rating agency.
Meanwhile, excess liquidity in the banking system continues to increase, said the report. The increase in liquidity absorption for the Variable Debit ReBO of the Reserve Bank of India (RBI) has resulted in an increase in short-term rates. “This will open the way to a gradual increase in police rates next year, which will lead to higher borrowing costs during the 2012 financial year,” said ICRA.
The rating agency stated that this would maintain a stable perspective for the banking sector despite the risk of the third wave that opposes the expectations of improving the quality of assets, profitability and capital cushions.