Crisil Ratings has released a report indicating that Indian banks' asset quality is likely to remain stable despite the ongoing conflict in West Asia, particularly the US-Iran war that began on February 28, 2026. The agency estimates that gross non-performing assets (NPAs) will be contained between 2.0-2.2% by the end of March 2027, compared to a historical low of approximately 2.0% in March 2026. While the corporate sector, which represents 36% of India's total bank credit, is expected to maintain stable NPAs of 1.2-1.3%, the micro, small, and medium enterprises (MSME) sector may experience a rise in NPAs to 3.4-3.6% from 3.2% last fiscal year due to limited financial resilience against rising costs and supply chain disruptions. Crisil's stress test of 30 sectors revealed that 23 sectors would experience limited credit profile impacts, while only one sector, ceramics, would face significant adverse effects. Government relief measures are expected to bolster MSMEs, and the retail banking sector is projected to remain unaffected due to cautious lending practices.