Goldman Sachs has cuts India's FY19 gross domestic product forecast to 7.6 per cent from 8 per cent, citing the fallout from over $2 billion fraud at Punjab National Bank. Goldman Sachs noted the fraud by itself would have only a small economic impact, but it could lead to tighter rules for lenders and lower leverage ratios across the sector
Such a scenario would reduce the impact of India's $32.4 billion recapitalisation plan unveiled last year, Goldman Sachs said.
It now expects more provisioning at lenders, with average haircuts on impaired loans of around 60 per cent-65 per cent over the next two years. India regained its status as the world's fastest growing major economy in October-December quarter, as it grew 7.2 per cent, the fastest in five quarters.