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Growth, profitability, and asset quality of Indian banks are likely to remain subdued for the next 12 months, despite a likely uptick in economic growth, Standard & Poor's Ratings Services said in its report titled 'India Banking Outlook 2014: Little Respite In Sight'.
"We expect weakness in banks' asset quality to persist for the next 12 months because the economic recovery is likely to be tepid, and it will take time for the domestic industry to recover and corporate balance sheet leverage to decline," said Standard & Poor's credit analyst Amit Pandey.
Indian banks will need sizeable capital to support growth and meet Basel III requirements, the report noted.
Rated private sector banks are better placed than their public sector peers in terms of meeting Basel III capital requirements. Public sector banks will have to rely on a combination of government capital infusion and equity markets to support their capitalisation, the report said.
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