Search the Internet          Tips  Sites: Finance, Investment

S&P classifies Indian banking system a 'high risk' sector

International rating agency Standard and Poor's has classified the Indian banking system as a 'high risk' sector among Asia-Pacific countries. China, Vietnam and Indonesia are under the 'highest risk' category.

Also joining the high risk category with India are the Phillippines and Thailand, according to S&P's latest economic and industry risk profiles of the banking systems in the Asia-Pacific region.

''Risk escalates significantly in the banking systems of India, the Philippines and Thailand, which are classified as high risk,'' it said.

The agency said the Indian economy was marked by the tension between market forces and bureaucratic indolence, giving rise to inefficiency not only in the economy but also in the banking sector, which remains largely state-owned.

''While there have been several initiatives to speed up legal and regulatory reforms, the pace remains slow. Conversely, the system's inertia does lend it a degree of stability compared with other socialist-inclined banking systems, such as those in China and Vietnam, which are becoming more commercially-oriented, with all risks implied in such a reorientation,'' it said.

''Not surprisingly, the economic and industry risks of the Asia-Pacific banking systems vary widely,'' according to Ian Thompson, managing director, Financial Services Ratings.

UNI

ALSO READ:
Moody's gives 'stable' outlook for Indian banks
More Money Headlines

Tell us what you think of this report