Structural issues still haunting banks: Fitch

Chennai: The operating environment (OE) for Indian banks has strengthened as economic risks associated with the Covid-19 pandemic have ebbed, Fitch Ratings said in a report on Wednesday. Fitch also said other structural issues like lengthy legal process, bad bank not playing a meaningful role hamper the OE.

While the number of prudential indicators for the sector has also improved compared with pre-pandemic levels, though growing risk appetite in a relatively benign OE highlights the importance of appropriate buffers against potential stress, the credit rating agency added. Fitch revised its OE mid-point score for Indian banks to ‘bb’ from ‘bb+’ in March 2020, after assessing that the pandemic was likely to worsen the existing OE stresses facing the sector.