Banks are witnessing a spurt in asset quality stress in the non-corporate segment and the overall loan loss provisions for lenders are expected to stay elevated till fiscal year 2019-20, a report said. The outlook on private sector banks, along with SBI and Bank of Baroda among the state-run ones is stable, while all the other state-run banks carry a negative outlook, India Ratings said in its mid-year outlook on banks Monday. Banks will continue with credit costs or provisions of up to 3 percent for both the ongoing fiscal as well as the one after, according to the rating agency. It attributed the higher credit costs to aging of NPAs (non-performing assets) recognised earlier since the asset quality review of FY16, accelerated provisioning and slippages especially from non-corporate accounts. In what can be a worrying sign, the agency said it has observed a spurt in asset quality stress building up in the non-corporate loans, even as the same in the corporate segment has plateaued. It said there has been an increase in the share of smaller corporates, and small and medium-sized enterprises and personal\/retail loans in the special mention accounts (SMAs) pool in FY18 over FY17. The share of loans under Rs 5 crore in SMA1 accounts, or those cases where there has been no loan repayment for 31-60 days, has increased to 40 percent at the end of FY18 from 29 percent the year-ago, the report said, while the same for SMA2 where loans have not been serviced for 61-90 days has been to 68 percent as against 12 percent earlier. Even as the asset quality troubles continue, there are rising headwinds for credit availability, according to India Ratings. "The prevailing stressed financial conditions could intensify credit tightening unless liquidity of financing channels is at least partially reinvigorated," it said. The agency said adverse interest rate conditions, increasing risk aversion by state-run banks which leaves 35 percent of the banking system unable to serve the lower-rated borrowers, volatile external environment and lack of alternatives for financing are "critical" to corporate credit quality in FY19. Bank exposures of nearly Rs 4 lakh crore can be impacted by the absence of favorable liquidity\/market conditions and refinancing pressures, which will give the large non-bank players private banks to up their market share, it said. With the tightening in rates, some of the financing done by corporates through the bond markets can shift back to the banks which will help increase corporate books for well-capitalized banks and also jack-up their earnings, it added. On the stress from corporate loans, it said the total corporate assets under stress has stayed between 20 percent and 21 percent of the overall bank credit for the two years to FY18.