Indian Banks Strongest in 15 Years, But Crisil Flags Key Risks

• Indian banks are in their strongest financial position in over a decade, according to Crisil Ratings' Chief Ratings Officer, Krishnan Sitaraman.
• Key metrics like gross NPAs, provisioning coverage, capital adequacy, and liquidity coverage are all at satisfactory levels.
• A growing disparity between credit and deposit growth is a significant structural risk, with the loan-to-deposit ratio at unprecedented levels.
• Initial signs of strain are appearing in certain MSME sectors, particularly export-oriented ones tied to the US market (gems and jewelry, home textiles, marine foods).
• Crisil forecasts a modest increase in NPAs to approximately 3.9% by fiscal year-end, indicating localized rather than widespread stress.

Why It Matters: Indian banks are robust, but monitor credit-deposit gap and localized MSME stress for sustained financial health.