India Ratings upgrades outlook on banking sector to 'stable' for FY22

India Ratings and Research (In-Ra) has upgraded the outlook on the banking sector from “negative” to “stable” for FY22.

The change in outlook is driven by a reduction in the system-wide Covid-19 linked stress to below the expected levels on back of liquidity support and emergency credit support, especially to micro, small and medium units (MSMEs).

Banks have also strengthened their financials by raising capital and building provision buffers, Indi-Ra said in a statement.

The rating agency has upgraded its FY21 credit growth estimates to 6.9 per cent from 1.8 per cent. The credit is expected to grow at