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S&P Global Ratings has said Indian banking sector profitability will stabilise at a healthy level, and asset quality will continue to improve. It said a strong recovery is underway in the Indian banking sector, and lenders have just reported their best results in a decade. 

Indian banking profitability is benefiting from higher net interest margins and lower credit costs. India's strong economic performance is bolstering the banking sector. S&P Global Ratings credit analyst Deepali Seth Chhabria said Indian banks' earnings will likely remain healthy. The sector has improved substantially in the past seven years, from a period when many public-sector lenders were grappling with bad loans.

S&P Global Ratings still forecasts the country will grow 6-7 per cent annually until 2026 at least, making India the fastest-growing economy in Asia-Pacific, and the fastest-growing large economy globally.