According to the rating agency Fitch.RBI's Covid-19 relief package will provide some relief to financial institutions (FIs) in the next 12-24 months. However, it will largely be at the expense of postponing the recognition and resolution of underlying asset-quality problems.
There are growing indications that India’s latest wave of Covid-19 infections will add to risks among financial institutions (FIs) by sapping near-term momentum from the economic recovery, Fitch Ratings said in a statement.
“We expect the shock to economic activity from the latest wave of the pandemic in India to be less severe than in 2020, even though caseloads and fatalities are much higher. The authorities are implementing lockdowns more narrowly, and companies and individuals have adjusted behaviour in ways that cushion the effects," it added.
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