India, Jan. 7 -- Indian banks are set to benefit from enhanced oversight by the Reserve Bank of India (RBI) and a more robust supervisory toolkit, which should reduce systemic risks and improve the operating environment, a report said.

These shifts, paired with strong economic growth prospects and reduced inflation risks, are credit positive for the sector, global rating agency Fitch said in a report.

"We believe regulatory responses to stress events, frameworks for monitoring risks and recovery of impaired loans have improved in recent years. Consequently, weaknesses that contributed to the last non-performing loan spike between the financial year ended March 2016 (FY16) and FY18 have been significantly reduced," it said.

Banking syst...