Moody’s upgrades Indian banking system’s outlook to stable from negative. Does it mean that problems faced by banking system are behind now?
The Indian banking system is in the sweet spot to support the economy because word of the NPA cycle is behind us. We are seeing significant improvement in the asset quality and the loan growth is likely to get momentum soon on the back of a strong recovery in the Indian economy.
The cleanup process has been done which was undergoing for more than five years that includes the formation of NCLT and bad bank, consolidation of PSU banks, capital infusion, etc and it is time to gear up the credit cycle thanks to the Capex program by the government where the private cycle may also get momentum soon. Banks have adequate liquidity and corporates are ready for fresh capital expenditure after deleveraging their balance sheets.
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