MUMBAI, Apr 1: Amid the West Asia conflict, domestic rating agency Crisil on Wednesday estimated that banks’ credit growth would moderate marginally in FY27 and delinquencies would rise.
The banking system will report a 13 per cent credit growth in 2026-27, a marginal dip compared to the 14 per cent projected for FY26, it said.The agency also said the gross non-performing assets in the banking system have bottomed out, and may rise by up to 0.20 per cent to 2.5 per cent by March 2027.
Its chief rating officer Krishnan Sitaraman pointed out that loans to micro, small and medium enterprises, especially those having an exposure to West Asia either as a market or as a source of raw material, are the key monitorable, along with micro-loans against property and some unsecured advances.
He acknowledged that entities in sectors, such as ceramics and diamond polishing, have already faced adverse impact because of the war in West Asia.
Apart from the conflict-related challenges, Bihar’s microfinance bill and the impact on credit culture because of Maharashtra’s loan waiver scheme are also the factors to be monitored, the agency said.
When asked about a relief package in light of the West Asia conflict and what the contours of the same will be, agency officials declined to give any specific answers and limited themselves to saying that the fiscal and monetary authorities will respond after adversarial events with relief packages for the industry.
The measures can come in if the war is prolonged, the agency said, admitting that predicting the exact impact or the relief measures is a difficult job at present.
All estimates have been made without assuming any relief measures, it said.
Apart from asset quality, deposit mobilisation by banks is also a key monitorable as it will influence the credit growth as well, the agency said.
The final credit growth will be influenced by banks’ performance on deposit mobilisation, it said, adding that if the CD ratio continues to remain elevated, banks will have to step up on securitisations. (PTI)
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