S&P Global Ratings cautions that strong credit growth in Indian banks could ease to 12-14% in the next fiscal if deposit growth remains subdued, leading to tightening liquidity conditions. The report highlights potential challenges like the need for wholesale funding, increased funding costs impacting margins, and the rising share of unsecured personal loans. Despite stable asset quality and capitalization, S&P emphasizes the impact of liquidity constraints on India's banking sector's robust credit growth.
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