Indian banks will continue to reel under the impact of bad loans in the current financial year, although new non-performing assets may decline, says a Moody's report.
"In our opinion, the Indian banks are unlikely to reduce their problem loan ratios in FY2016 but the new non-performing loans will probably decline," Moody's Investors Service said, based on findings of a poll.
State-owned banks have little capacity to improve their generally weak capital buffers through retained earnings as capital infusion, including from government, is likely to remain scarce, it said.
Bulk of the respondents, according to a poll result, are not expecting any significant improvement in the capital levels of the state-owned banks over the next two years.