Moody’s Cuts India Banks Outlook to Negative on Virus-led Damage

Moody’s Investors Service slashed the outlook for the Indian banking system to negative from stable citing disruptions to economic activity from the coronavirus pandemic that will worsen the ongoing slowdown and impair lenders’ asset quality, Bloomberg News reported. A deterioration in global economic conditions and a 21-day lockdown imposed by India will weigh on domestic demand and private investment, the ratings agency said in a statement Thursday. This in turn will cause a spike in unemployment and worsen banks’ asset across the corporate, small business and retail segments, pressuring their profitability and capital, it said. India has announced a raft of monetary easing measures including sharp cuts to policy rates and a $50 billion cash line to lenders in order to boost credit and ease financial stress in a sector that was battered by a crisis among shadow lenders and witnessed default by a private sector bank even before the viral outbreak hit India. Read more