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2026-05-26 14:52:53
[The Reserve Bank of India (RBI) discusses the impact of the Iraq War with rating agencies, assessing potential pressure on borrowers] (1) Sources familiar with the matter revealed that the RBI has begun discussions with local credit rating agencies to assess the potential pressure that the Iraq War may bring to borrowers, in order to avoid being caught off guard by regulators in the event of an escalation of the conflict. (2) The RBI consulted rating agencies to determine whether temporary regulatory easing measures are needed to prevent borrowers' creditworthiness from deteriorating. Although the non-performing loan ratio in the Indian banking sector remains at a level not seen in decades, regulators are closely monitoring signs of financial stress in order to avoid broader credit pressure dragging down economic growth; at the same time, they emphasized that the discussions do not mean that a state of emergency has been declared. (3) Rating agencies have submitted preliminary assessments to the RBI, outlining various credit risk scenarios that may occur if the war continues, and expect the impact to be transmitted mainly through channels such as increased input costs, supply chain disruptions, and weakening demand.
