SMEs, real estate to drive asset quality deterioration in India, China: S&P

Emerging markets face slippage, volatile capital flow risks

Against the backdrop of the Coronavirus (Covid-19) pandemic and its aftermath, small and medium enterprises (SMEs) will lead asset-quality deterioration, particularly for countries like Turkey, South Africa, India, China, Indonesia, and Thailand.

Tourism and export-oriented SMEs are more vulnerable in this challenging environment, according to rating agency Standard and Poor’s (S&P).

Apart from SMEs, real estate is another source of asset quality pressures for banks in emerging markets. However, the immediate risks appear manageable, S&P said.

Stress in Indian SMEs is somewhat tempered by the government's guarantee of new loans taken by SMEs, up to 20 per cent of their aggregate loans, thereby