New Delhi, Apr 1 (KNN) Crisil Ratings on Wednesday projected bank credit growth to moderate to around 13 per cent in FY27 from an estimated 14 per cent in FY26, amid ongoing tensions in West Asia.
The rating agency indicated that asset quality has likely bottomed out, with gross non-performing assets (NPAs) expected to rise modestly by up to 0.20 percentage points to around 2.5 per cent by March 2027.
According to Crisil’s Chief Rating Officer, Krishnan Sitaraman, loans to micro, small and medium enterprises (MSMEs) remain a key area of concern, particularly those linked to West Asia through trade or supply chains. Segments such as micro-loans against property and certain unsecured loans are also being closely monitored, reported PTI.
Some sectors, including ceramics and diamond polishing, have already experienced stress due to disruptions caused by the conflict. Additionally, domestic factors such as Bihar’s microfinance legislation and Maharashtra’s loan waiver scheme may influence credit discipline and repayment behaviour.
Crisil noted that while fiscal and monetary authorities may introduce relief measures if the conflict persists, the timing and scope remain uncertain. Current projections do not factor in any such interventions.
The agency also highlighted deposit mobilisation as a critical factor influencing future credit growth. Elevated credit-deposit ratios may push banks to increase reliance on securitisation to sustain lending.
While the banking sector remains stable overall, evolving geopolitical risks and domestic policy developments are expected to shape credit growth and asset quality trends in the coming fiscal year.
(KNN Bureau)
