Global investors to buy more into Indian banks: S&P Global
investors looking for better returns are set to buy more into Indian banks as improved margins and stable asset quality make such stocks attractive for bulge-bracket funds, said a report by S&P Global Market Intelligence.
The total market value of foreign institutional investors' holdings in Indian banks has risen to ₹8.3 lakh crore as of June 30, from ₹7.7 lakh crore a year ago, said the report.
The country's economic growth prospects and the lenders' solid performance are some factors driving the investor interest. Following this trend, more global investors are likely to participate.
In its financial stability report, India's central bank said the asset quality of SCBs continued to improve and their GNPA ratio declined to a decade low of 3.9% in March 2023.
«More investments in Indian lenders may come from Australia, Europe, Japan, South Korea and the Middle East», said the report.
It cited the «dearth of investment opportunities in their home markets and a shift in investors' geopolitical focus» to be the reason.
Sandeep Upadhyay, MD of infrastructure practice at Centrum Capital, warned that some risks still surround Indian banks in an otherwise favourable environment, including sustaining credit growth. High credit growth has helped banks improve their portfolio, but over-caution may erase gains for the lenders in the long term, he said in the report.
India's private sector banks hold the majority of foreign institutional investors' holdings — 93.5% of the total value, said the report.
