Mumbai, Aug. 27 -- India Ratings and Research has raised its banking-sector credit growth forecast to 15% for the current financial year from 13% earlier, but warned that the current pace of expansion is unlikely to be sustained amid elevated loan-deposit ratios (LDR), pressure on profitability, and higher credit costs emerging as key risks.

The rating agency maintained a neutral outlook on the banking sector, saying the latest 19.3% year-on-year credit growth is being driven largely by lower-yielding corporate and non-bank finance company (NBFC) loans rather than a broad-based acceleration in lending. The deposit growth was 15.4% as of 31 July.

".high LDR in the banking system, at about 85%, along with moderated profitability, resultin...