Indian bks more exposed to W Asia crisis among APAC region: Moody’s

PTI

New Delhi

Moody's Ratings on Wednesday said Indian banks are among the more exposed in the Asia-Pacific (APAC) region, given the economy's high dependence on energy imports from West Asia and the consequent pressure on inflation, interest rates, and borrower cash flows.

The US-based rating agency said in a report that sustained high energy prices due to the prolonged West Asia conflict will impact the credit profiles of APAC banks via their loan portfolios and financial channels. Higher fuel costs will strain consumers' budgets and raise debt-servicing burdens for households and small and medium enterprises (SMEs), translating into increased, though gradual, credit stress in these loan portfolios.

"Our new central scenario reflects a sustained Strait of Hormuz disruption through the third quarter of 2026, with oil prices averaging USD 90-110 per barrel during much of the year," Moody's said, adding that it expects financial conditions to remain relatively tight across energy-importing economies. Lower economic growth, higher rates and inflation in some markets, and local currency pressures will negatively impact APAC banks' loan quality and profitability, it noted. India's non-bank lenders face particular pressure, given their large exposure to unsecured retail loans, where asset quality deterioration is expected.