‘Strong buffers will help banks tackle asset risks’

ECLGS helped with liquidity: Moody’s

The second wave of COVID-19 infections will lead to new problems for loans in the retail and SME segments, but improved profitability, capital and strong buffers of banks will help them absorb anticipated loan losses and maintain credit strength, Moody’s Investors Services said in a report on Indian banks. “A severe deterioration of banks’ asset quality is unlikely despite an expected rise in new loan impairments, particularly among individuals and small businesses that were hit the hardest by the virus outbreak,” said Alka Anbarasu, a Moody’s vice president and senior credit officer. “This is because government initiatives like the emergency credit linked guarantee scheme (ECLGS) have been effective in providing immediate liquidity for businesses,” she said.