Indian Banks' Resilience Shines: Fitch Predicts Positive Outlook for 2025

Fitch Ratings forecasts a robust outlook for Indian banks in 2025, with the sector's impaired-loan ratio expected to improve to 2.4% in March 2025, down 40 basis points from the previous year. Despite concerns over rising unsecured retail loan defaults, major banks are demonstrating resilience through improved asset quality and strong financial performance. Fitch projects a further 20-basis-point improvement in FY26, highlighting the sector's strengthening fundamentals. However, the agency cautions that rapid expansion in unsecured lending could pose medium-term risks. Overall, the positive trend in asset quality and profitability is bolstering Indian banks' intrinsic creditworthiness, potentially supporting their Viability Ratings in the coming year.

 

Sources: Fitch Ratings, CNBC TV18, Axis Bank Financial Report