The significant number of the bank's borrowers opting for moratorium could be partly due to some of the stronger borrowers also opting to conserve liquidity in these tough times. “We will compare the proportion of customers availing the moratorium to see if Axis is an outlier to peers”, it added.
The negative outlook on Axis (BBB-/Negative/A-3) reflects view that the economic risks for the bank, and the Indian economy at large, remain high. “We expect the bank to maintain its strong market position and adequate capitalization over the next 18 months”, S&P said.
The systemic pressures for Indian banks
could rise owing to the recently announced extension of the nationwide lockdown to check the Covid-19 spread.
The Reserve Bank of India's (RBI) open market operations and targeted longer-term refinancing operations, the government's Rs 1.7 trillion aid package for the poor, and the relaxation of lockdown restriction in some districts could temper economic risks. A potential increase in the duration of the loan moratorium could also help borrowers suffering from temporary liquidity issues.