Indian Banking System’s Outlook Cut to Negative by Moody’s

The outlook for India’s banking system was downgraded to negative by Moody’s Investors Service, citing concern that global economic turmoil and a domestic slowdown may trigger more defaults and curb profitability.

“India’s economic momentum is slowing because of high inflation, monetary tightening, and rapidly rising interest rates,” said Vineet Gupta, a senior analyst at Moody’s in Singapore. “At the same time, concerns have emerged over the sustainability of the recovery in the U.S. and Europe, and the rise in the borrowing program of the Indian government, which could drain funds away from the private credit market.”