S&P Global Ratings projects India’s economy to grow 6.5-7% annually until 2027, supported by infrastructure spending and private consumption. Strong economic prospects are expected to support bank asset quality and loan growth, but deposit growth may lag. The banking sector’s weak loans will decline to about 3% of gross loans by March 31, 2025. Underwriting standards for retail loans in India are healthy, and delinquencies in this segment remain manageable. However, unsecured personal loans have grown rapidly and could contribute to incremental nonperforming loans. The RBI is becoming more vocal and imposing heavy penalties on banks as it focuses on technology, compliance, customer complaints, data privacy, governance, and know-your-customer issues.
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