S&P Global Ratings on Monday expressed scepticism over allowing corporate ownership in banks given India’s weak corporate governance amid large corporate defaults over the past few years.
It also said that the RBI will face challenges in supervising non-financial sector entities at a time the health of the financial sector is weak.
The performance of India’s corporate sector over the past few years has been weak with large corporate defaults, it said, adding that non-performing loans (NPLs) for the corporate sector stood at around 13 per cent of total corporate loans as of March 2020 (around 18 per cent as of March 2018), highlighting the more pronounced risk in India compared with other countries.
The US-based rating agency, however, said the RBI panel’s recommendations on awarding new licences to well-managed Indian non-bank financial companies could improve financial stability