Notably, despite the acute stress faced, the past 11 months saw 55 per cent fewer downgrades to default, year-on-year. That’s primarily due to emergency regulatory and policy support such as loan moratorium, relaxation in default recognition up to December 2020. The one-time restructuring relief and emergency credit line guarantee scheme also added to support.
The extent of increase in stress among companies
and, in turn, for banks and non-banks, will be the monitorable in the road ahead, even as improving demand provides offset. Highly resilient sectors such as pharmaceuticals and agrochemicals performed well owing to sustained demand, it said.
The credit ratio for these sectors remained above 1 ( one) even during the bleakest period of the pandemic. The turnaround has been sharper in investment-linked sectors such as construction and engineering, and consumption-linked sectors such as packaging. The credit ratio has already doubled compared with the first half, supported by macroeconomic revival.
However, in low-resilience sectors such as hotels and resorts, real estate developers and airport operators, downgrades continue to outpace upgrades owing to their discretionary nature and leveraged balance sheets, the ratings agency added.
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