Mutual Fund

Moody’s estimates GDP to grow at 7.4% in FY2019-20, outlook on banks stable

Moody’s Investors Service’s annual Banking System Outlook on India estimated the country’s real gross domestic product (GDP) for the current financial year and next financial yea to grow at 7.2 per cent and 7.4 per cent, respectively. In its banking system outlook published on Monday, the global rating agency stated that the growth will be driven by investment growth and strong consumption. It also stated that the operating environment will be stable supported by robust economic growth. It, however, asserted that liquidity constraints at non-bank finance institutions (NBFIs), increasingly important providers of credit for the economy, will be a drag on growth. Also, rising interest rates are a risk, the report read. It said that corporates’ financial health will limit new NPL formation while adding that stress among NBFIs is a risk. Moody’s also noted that capitalisation at public sector banks will remain weak but government support will provide relief. Public sector banks will continue to grapple with weak capitalisation and depend on government capital injections to meet minimum capital requirements, it added.

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