The Kerala floods could materially affect the unsecured lending of microfinance institutions, SME businesses and the state\u2019s agriculture output, resulting in higher loan slippages and insurance claims, according to India Ratings and Research (Ind-Ra). While Kerala has 14 districts and the coastal districts have been relatively unaffected, eight districts comprising 56% of the state\u2019s population have suffered major losses. Kerala is the 10th largest state in terms of overall bank credit, and its share in total bank credit was 3.2% and in deposits 3.8% in FY18. Many regional commercial banks would be affected due to their legacy state exposure towards SME and agriculture, where loan slippages could materially rise till the borrowers\u2019 cash flows normalise. Large regional banks such as Federal Bank and South Indian Bank could see an immediate increase of 20%-25% in gross NPL. Gold financiers would particularly be impacted and could see higher auctioning post moratorium, as their borrowers largely depend on agricultural activities for servicing loans, said Ind-Ra. Microfinance institutions\u2019 exposure to the state stood around Rs 2,100 crore with PAR30 (standard measurement in microfinance) at 2.7% in FY18. Post this event, there could be a spike in PAR30 number for the eight players operating in the Kerala geography, where portfolio behaviour would remain vulnerable, largely due to the loss of livelihood for many borrowers.