New Delhi, Sep 9 (IANS): Even as asset quality of the countrys banking sector is likely to deteriorate, the risks from corporate loan books have declined, Moodys Investors Service said in a report on Wednesday.

"Corporates will not be immune from the ongoing economic contraction caused by the coronavirus outbreak," Srikanth Vadlamani, Moody's Vice President and Senior Credit Officer said in a statement.

"Near-term stress at corporates is already visible in the very weak performance in the quarter ending June 2020."

However, Vadlamani cited that risks from corporate loans have decreased from 2012-19, when a large amount of corporate loans were impaired.

"With exposures to most corporates with weak financial health already recognized as NPLs, currently performing loans are better placed to withstand stress," added Vadlamani.

"Lending in the past few years has been concentrated among stronger companies amid an overall slowdown in capital expenditure, while banks have also become more conservative in selecting borrowers."

According to the report, among the corporate sectors, loans to finance and real estate companies, which together make up a large share of total bank loans, are most at risk, because both sectors are facing operating cash flow challenges.

"Sectors most affected by the coronavirus outbreak, such as transportation and hospitality, are also vulnerable, although banks' direct exposures to these borrowers are relatively small," the statement said.