Fitch Ratings has stated that a rise in risk appetite among Indian banks may affect their intrinsic creditworthiness and reinforces the importance of assessing individual banks’ ability to withstand expected and unexpected balance-sheet stress. Banks’ loan growth reached 15.4% in the financial year ending in March 2023, the highest since 2012. However, fast loan growth and higher exposure to certain assets may indicate greater risk appetite and could affect risk profiles. The increased risk appetite could be a result of banks’ efforts to boost returns after increased funding costs. Credit card lending and personal loan exposure rose to 10.2% of system loans, while exposure to non-bank financial corporations grew to 10.5% in the same period, indicating an increasing risk appetite.
Rising Risk Appetite May Impact Credit Profiles of Some Banks: Fitch
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