ATMs of public and private sector banks in India (Photograph: Adeel Halim/Bloomberg)

Why Morgan Stanley Remains Positive On Private Lenders, NBFCs

Morgan Stanley is bullish on Indian private sector lenders and non-banking finance companies, even as they grapple with asset quality woes. That’s because these entities have done better than state-owned lenders on recognition and provisioning for bad loans, the global brokerage said.

“Retail lenders in India are strong [growth] compounders and growth prospects for NBFCs remain high,” Anil Agarwal, head of Asian Financial Research at the brokerage, told BloombergQuint on the sidelines of Morgan Stanley Investor Summit in Mumbai.

He expects another year of weak earnings in the banking space, especially for public sector lenders.

Here are the key highlights from the interaction:

  • Bankings stocks are largely pricing in asset and loan book stress.
  • UPI and digital payment data has been exceptional recently, and digital banking can take market share from public sector banks.
  • Deposit side market share loss for public sector banks has been limited.

Also read: India's Banking Bog Needs a Private Road to Salvation

Watch the full conversation here: