Soured debt is now the highest since 2000, hampering credit expansion that’s needed to spur Asia’s third-largest economy Moody’s Investors Service analyst Srikanth Vadlamani said the move is a “significant credit positive” for India’s state-run banks. State-run banks account for almost 90 per cent of all non-performing loans in the South Asian nation, according to Credit Suisse Group AG data.Privately owned banks aren’t immune. Shares of Axis Bank Ltd . tumbled last week after the private-sector lender said it expects credit costs to surge because of an increase in soured debt.As of Tuesday, Fitch had a negative outlook on Indian banks based on its assessment of the sector’s weak core capitalization. Moody’s highlighted significant capital shortfalls at several banks, while assigning a stable outlook to the banking system.The state banks’ scope to sell shares has also been curtailed by a rule requiring the government to own at least 51 per cent of the lenders.

Source: Economic Times October 25, 2017 04:07 UTC