• It further highlighted that India will continue to be the fastest-growing economy among Group-20 (G20) nations, driven by robust domestic consumption, policy measures, and a stable banking system.

Key Projections:
Marginal Growth in Bank Loan: The global rating agency has also projected that the system-wide loan growth will increase marginally to 11-13% in FY27, compared to 10.6% in FY26 year-to-date. However, the overall system-wide loan-deposit ratio is expected to remain around 80%.
NIMs & Loan-to-Deposit Dynamics: Moody’s expects  Net Interest Margins (NIMs) to improve gradually as deposit costs decline with a lag following earlier rate cuts, supporting profitability in India’s banking sector.

• At the same time, loans are projected to grow in tandem with deposits, keeping the systemwide loan-to-deposit ratio around 80% through FY27.

Asset Quality Outlook: Moody’s expects the  Non-Performing Loan (NPL)ratio to remain low at 2%–2.5%, with a slight rise in slippages as loans mature, while retail asset quality stays stable, particularly among prime borrowers.
Banking Sector Profitability: As per the agency, the banking sector profitability will remain stable with the system-wide Return on Assets (ROA) to increase to 1.2-1.3% in FY27 compared to 1.2% recorded in the 1st half (H1: April- September) of FY26.