Fri. Mar 29th, 2024
Private Banks In India

Top five private sector banks may witness their slippages exceeding to 5 percent this fiscal due to the weak loan offtake. The moratorium-centric reduction in net interest margins warns a report.

The five banks, namely HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and IndusInd Bank, collectively dominate a quarter of the system and three-fourths of the private banking, as per the report by India Ratings on Friday.

“We forecast FY21 slippages to double to around 5 percent for these banks from 2.3 percent and 2.7 percent in FY19 and FY20, respectively. Even though net slippages would be lower if refinancing persists a challenge, occurring in a 4 percent shrinkage in their net interest margin,” says the report.

As loan demand continues to remain moderate, banks are depositing their excess liquidity in low yielding options such as government bonds and top-rated corporate securities due to their higher credit risk perception and widening duration spreads, even as deposit inflows have been robust.

Leave a Reply

Your email address will not be published. Required fields are marked *