Global ratings agency
Fitch on Wednesday said the asset quality of Indian banks is expected to further deteriorate in 2012.
The non-performing assets of Indian banks are expected to touch 4 per cent of the total assets from about 3 per cent in 2011, Fitch said in a report.
"The momentum of rising
NPAs may continue through most of 2012. Stresses are also building up in infrastructure loans caused by delays in project implementation and cost overruns," it said.
"Some of these are being restructured; the high single-name concentrations in this business may push up state-owned banks restructured portfolios to 7-8 per cent of total loans, significantly higher than the 4.4 per cent level in the aftermath of the 2008 global financial crisis," it said.
Borrowers are affected by rising input costs, including interest rates; a slowdown in demand growth and sharply fluctuating exchange rates, it said.
Fitch also said the stable outlook for Indian banks is premised on a recovery in the domestic economy in 2012, together with a continued commitment by government to maintaining a minimum Tier 1 ratio of 8 per cent for its public sector banks accounting for 73 of system assets.
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