New Delhi, Aug. 24 -- Indian banks will likely maintain benign asset quality trends, with deleveraging in unsecured lending limiting incremental stress and the West Asia crisis having minimal impact on asset quality, according to a report by Goldman Sachs.

According to the report, the outlook for asset quality of Indian banks has improved significantly over the past five years, with overall stress remaining contained. Moreover, the concerns have largely been limited to granular unsecured loans -- particularly in the consumer unsecured and microfinance (MFI) segments.

"In our view, aggressive lending in these segments drove over-leveraging and triggered the non-performing loan (NPL) cycle; however, this impact was largely restricted to m...