Fitch Ratings believe that the Indian banking sector is still struggling with poor asset quality and weak core capitalisation.It said banks' impaired loans ratio has declined to 10.8 per cent in first nine months (April to December) of fiscal 2018-19 from 11.5 per cent in the financial year ending March 2018 (FY 18), marking a reversal in trend.At the same time, the government's capital injection of over 14.5 billion dollars in FY19 has lifted the capital position for many state banks from recent historical lows.Nonetheless, capital buffers are still assessed by Fitch as moderate and do not leave much room for growth, while the impaired loans ratio is still very high at several state banks compared with the sector average."Resolution of more non-performing loans (NPLs) in current fiscal 2019-20 will be positive for earnings and asset quality, although Fitch believes that most state-owned banks will require further equity injections to pursue meaningful credit growth," it said in a ...
