Prolonged economic slowdown to hurt retail loan quality: Moody's

Slower economic growth in India over the past few quarters will dent the debt repayment capacity of households and hurt retail loan quality, according to rating agency Moody’s.

Private-sector banks have a larger exposure to retail loans and may be more at risk. However, the rise in non-performing loans will likely be gradual.

Moody’s, in a statement, said India’s growth had decelerated as an investment-led slowdown had now broadened into weakening consumption. Financial stress among rural households and sluggish job creation are among the key drivers of the slowdown.

A credit crunch among non-bank financial institutions (NBFIs), the major providers of retail loans