Moderate asset quality pressure may re-emerge for banks: Fitch

Moderate pressures on asset quality of Indian banks may re-emerge as forbearance starts to unwind from 2023, Fitch Ratings said on Friday. 

However, the better near-term performance should create headroom for banks to absorb stress while maintaining their current financial metrics, it said. 

Indian banks have benefited from regulatory-sanctioned deferred recognition of pandemic-driven stress, which has led to a decline in impaired loan ratios and an earnings recovery that is being driven by lower loan impairment charges, the agency said in a statement. India’s economic recovery and regulatory forbearance support domestic banks in the near term. There has been improvement