Deccan Herald : Jun 09, 2020, 09:05 PM
New Delhi: Indian banks’ loan growth will slow to nil to 1% in the year started April 1, according to the Indian unit of S&P Global Ratings.That’s lower than 6.1% the previous fiscal year, which was already a multi-decade low. Corporate borrowings, which account for half of total credit, will be worst-hit and loans to individuals will decelerate to “low single digits” from “mid teens” in the past few years, Crisil Ltd. said in a report Monday.Reeling under the worst bad-loan ratio in the world, Indian banks have turned risk-averse as the strict shelter-at-home rules have shuttered businesses and left millions jobless. Prime Minister Narendra Modi is counting on fresh credit to spur an economy hurtling toward a rare contraction.“This crisis is unprecedented and so will its economic fallout be,” said Crisil’s Senior Director Krishnan Sitaraman.Even before the coronavirus pandemic, India’s $1.7 trillion financial sector had been weakened by a festering shadow banking crisis that surfaced in 2018 and spilled over into banks and mutual funds, pushing up bad loans and eventually leading to the bailout of a private sector bank in March.Crisil predicts loan growth will pick up to high single digits in the next financial year.