Good performance masks problem assets for Indian banks, says S&P

Tough for banks to keep NPA levels low in future

The forbearance – moratorium on repayments for six months-- is masking problem assets for Indian banks arising out of Covid-19. Financial institutions, including banks, are likely to have trouble maintaining momentum after the proportion of non-performing loans (NPL) to total loans declined consistently in 2020, according to Standard and Poor’s (S&P).

Rating agency S&P, in a statement, said while financial institutions performed better than we expected in the second quarter, much of this is due to the six-month loan moratorium, as well as a Supreme Court ruling barring banks from classifying any borrower as a non-performing asset. It released a