MASTER STROKES - Embracing Automation And Innovation: A Transformative Era For Banking

In a world rife with geopolitical tension, interest rate hikes, runaway inflation and monetary tightening, banks today face challenges that are putting significant pressure on their margins. However, amidst these obstacles, the banking sector in India has shown remarkableresilience

IN A WORLD rife with geopolitical tension, interest rate hikes, runaway inflation and monetary tightening, banks today face challenges that are putting significant pressure on their margins. However, amidst these obstacles, the banking sector in India has shown remarkable resilience.

Recently, even an institution such as Moody’s expressed confidence in the credit quality of Indian banks and Non-Bank Financial Corporations (NBFCs) amidst a challenging global banking sector. The agency believes that these institutions are well-positioned to withstand any stress in the banking industry. Several factors contribute to this resilience. Firstly, the strong domestic demand in India plays a vital role in supporting the credit quality. Credit conditions for bank borrowers have been improving, further bolstering the stability of these institutions.

Speaking with BW Businessworld, Shailja Singh, Director- Technology Sales, Enterprise, IBM India & South Asia agrees with Moody’s assessment that the trends remain positive in the Indian banking sector. She highlights increased net interest margins (NIMs), robust credit growth and better control over non-performing assets (NPAs) provisioning. While Singh lauds the maturity of the Indian market in terms of payments, she also stresses the emergence of new use cases in areas such as buy now pay later (BNPL), wealth management, corporate banking, retail lending, and insurance.

Moody’s Indian affiliate, Investment Information and Credit Rating Agency (ICRA), also shares a positive outlook for the banking sector. They expect healthy profitability, driven by robust loan growth and a favorable credit environment. Overall, the combination of these factors instills confidence in the credit quality of Indian banks and NBFCs, despite the global challenges faced by the banking industry.