Moody's DownGrades Indian Banks

[sob]

Moody's downgrades India banking system outlook to negative

Moody's Investors Service has changed its outlook for India's banking system to negative from stable due to concerns that an increasingly challenging operating environment will adversely affect asset quality, capitalization, and profitability. The outlook applies for the next 12-18 months.

"India's economic momentum is slowing because of high inflation, monetary tightening, and rapidly rising interest rates. At the same time, concerns have emerged over the sustainability of the recovery in the US and Europe, and the rise in the borrowing program of the Indian government, which could drain funds away from the private credit market," says Vineet Gupta, a Moody's Vice President and Senior Analyst.

Moody's rates 15 commercial banks in India, which together account for about 66 per cent of the system's total assets as of March 2011. The system is dominated by public-sector banks, which account for around 75 per cent of the market in asset terms.


Read more at: Moody's downgrades India banking system outlook to negative - NDTV Profit

 

[sob]

Earlier also Moody's had warned about the Indian Public Sector Banks being made to take the burden of the Farm Loans write off. As long as the Government continues to use the PSU Banks to fulfill their political agenda this problem will continue.