Fitch Ratings maintained the negative outlook on the Indian banking sector based on an assessment on the sector's core capitalisation, a top official of the ratings agency said on Wednesday.
"We have maintained the negative outlook on the sector and the large part of that is from our concerns on capitalisation levels at public sector banks and how they have eroded because of losses. There are going to be pressures on asset quality front," Fitch Director Saswata Guha told BTVi in an interview.
He said the stock of stressed assets would continue to attract provisions. Going forward, the story on the earning side was very dim.
"The loan growth has already been very weak and going forward, it will probably be to the range of 5-7 per cent in the current financial year. At the system level, we do not expect any major uptick in the loan growth due to weak credit demand that continues to prevail," Guha said.
According to BTVi, the ratings agency has affirmed the long-term issuer default ratings also known as IDRs on eight Indian banks: State Bank of India, Bank of Baroda, Bank of Baroda - New Zealand, Punjab National Bank, Canara Bank, Bank of India, ICICI Bank and Axis Bank.