Credit quality pressures intensified for India Inc and it marked the lowest since 2016 in the first half of the fiscal 2020, says Crisil Ratings on Tuesday.
The rating agency, Crisil, pointed out a number of reasons for the dim situation such as global and domestic economic slowdown, sharp fall in consumption demand, and slower government spending.
As a result, Crisil’s debt-weighted credit ratio plunged to 0.25 time in the first half of fiscal 2020, compared with 1.65 times for fiscal 2019. The value of debt downgraded more than trebled to ₹1.38 lakh crore in the first half of fiscal 2020 from ₹39,000 crore in the first half of fiscal 2019. That’s the highest for any half since fiscal 2016.
So, the rating agency maintained a cautious outlook for the second half of the year. Constrained access to funding also affected credit profiles of entities across sectors, especially non-banks and real estate, the rating agency said.
“While measures announced by the government and the Reserve Bank of India to improve flow of credit to the sector, and sharper focus of non-banks on their asset-liability maturity profiles, are welcome, access and cost of funding will remain the key monitorables," Crisil said.