The volume of Indian loans subject to moratorium is dropping, suggesting that fears about large-scale defaults on banks’ retail lending books may be overblown, according to analysts at Macquarie Group Ltd, Bloomberg News reported. Based on soundings with home lending specialist Housing Development Finance Corp. and Indian banks, “the unanimous feedback has been that there has been a decline in the total loan book under moratorium from the 25–30% numbers reported as of end-May,” analysts led by Suresh Ganapathy wrote in a note.

The Insolvency and Bankruptcy Board of India (IBBI) has reconstituted its advisory committee on corporate insolvency resolution and liquidation, Telangana Today reported. The committee headed by Kotak Mahindra Bank CEO Uday Kotak, among other changes, has seen its expansion to 14 members instead of 12. “The committee shall advise and provide professional support, on the request of the board or its own volition, on any matter relating to the corporate insolvency resolution and liquidation dealt with by the board under the Insolvency and Bankruptcy Code, 2016,” said an IBBI order.

State Bank of India is seeking to recover two guarantees furnished by the former billionaire Anil Ambani, which according to a news report are worth more than $158 million, Bloomberg News reported. The state-run lender filed an application with the National Company Law Tribunal to appoint a resolution professional, according to an update on the court’s website. The tycoon, who had offered personal guarantee on the bank’s loans to his Reliance Communications Ltd. and Reliance Infratel Ltd., was given a week to reply on Thursday, according to the Press Trust of India.

Since India announced last month that it would temporarily suspend its insolvency law amid the pandemic, credit investors have grown concerned that some weaker borrowers may use the development as an excuse to delay or avoid debt payments, Bloomberg News reported. Yield premiums jumped after Finance Minister Nirmala Sitharaman unveiled the suspension, and the extra spread that investors demand to hold short-term AA rated debt over AAA notes has risen to its highest in about nine years.

Last week, as coronavirus continued to threaten growth around the world, Moody’s cut India back to Baa3. Fellow rating agencies Fitch and S&P, too, have India just one notch above junk, the Financial Times reported in a commentary. The country is not simply a victim of the havoc wrought by the pandemic. Its problems predate the virus. One crucial weakness is a slow-burning crisis in the financial system: a long history of bad lending decisions and poor governance has contributed to deep pain at banks, shadow banks and mutual funds.

India should prepare to inject capital into state banks and private-sector lenders need to strengthen their balance sheets, to help bolster the economy against the coronavirus pandemic, according to a senior banker, Bloomberg News reported. “I do believe the government will have to be ready to support public sector banks with capital,” said Uday Kotak, the billionaire founder of Kotak Mahindra Bank Ltd.

A cut in India’s sovereign rating to junk status may threaten the nation’s chances of being added to global bond indexes, steepen the bond yield curve and weaken the rupee, according to UBS Group AG, Bloomberg News reported. The Swiss bank expects S&P Global Ratings and Fitch Ratings to lower their outlook on the rating to negative from stable over the next couple of months, strategists led by Rohit Arora wrote in a June 3 note.

India’s credit rating was cut to the lowest investment grade by Moody’s Investors Service, citing policy challenges in addressing a prolonged slowdown and the government’s deteriorating fiscal position, Bloomberg News reported. The nation’s long-term foreign-currency credit rating was cut to Baa3 from Baa2, according to a statement. The outlook remains negative. “The negative outlook reflects dominant, mutually-reinforcing, downside risks from deeper stresses in the economy,” Moody’s said.

India may need to inject up to 1.5 trillion rupees ($19.81 billion) into its state-owned lenders as their pile of soured assets is expected to double during the coronavirus pandemic, three government and banking sources told Reuters, Reuters reported. The government initially considered a budget of around 250 billion rupees for bank recapitalisations but that has risen significantly, a senior government source with direct knowledge of the matter said, with loan defaults likely to rise as businesses take a severe hit from nationwide lockdowns to tackle the coronavirus.

At a time when fresh bids have been invited for the grounded Jet Airways, the deadline for completion of its insolvency resolution process has been extended till August 21 due to the nation-wide lockdown, imposed to contain the spread of the coronavirus (Covid-19) pandemic, Business Standard reported. The full service carrier, which shuttered operations in March 2019, is under Corporate Insolvency Resolution Process (CIRP) and the time period given for its completion was to end on June 13.