The best of times may be over for banks and finance companies as an adverse impact of the West Asia conflict and deficit monsoon conditions begin to weigh on their asset qualities. The formation of fresh stressed loans may rise in the second half of the current financial year, rating agency ICRA said on Tuesday. Slippages may grow for both, but will remain under control. MSMEs, due to potential oil shocks, supply chain disruptions and inflationary pressures, remain vulnerable, the agency said in a report. Loans to MSMEs and unsecured personal credit accounted for around 17% of the overall non-food bank credit of Rs 223 lakh crore as of August 2026.