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S&P raises long-term credit ratings on SBI, ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Union Bank of India, Indian Bank, Bajaj Finance, Tata Capital, and L&T Finance.
S&P says it expects India’s banks to maintain adequate asset quality, good profitability, and enhanced capitalisation over the next 12-24 months.
S&P Global Ratings on Friday upgraded the ratings of India’s 10 financial institutions, including State Bank of India, HDFC Bank, and Tata Capital, after it raised the country’s sovereign credit rating.
“India’s financial institutions will continue to ride the country’s good economic growth momentum. These entities will benefit from their domestic focus and structural improvements in the system such as in the recovery of bad loans,” S&P said.
The US-based agency raised long-term issuer credit ratings on seven Indian banks — SBI, ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Union Bank of India, and Indian Bank — and three finance companies — Bajaj Finance, Tata Capital, and L&T Finance.
“We expect India’s banks to maintain adequate asset quality, good profitability, and enhanced capitalisation over the next 12-24 months. This is despite some pockets of stress,” S&P noted, adding that overall credit risk in the financial system has eased.
On August 14, the agency had upgraded India’s sovereign rating to ‘BBB’ after more than 18 years, citing strong economic fundamentals that are likely to support growth in the next two to three years. It also pointed out that monetary policy has become “increasingly conducive to managing inflationary expectations”.
S&P highlighted that ratings of several Indian financial institutions remain capped by the sovereign rating, given the “direct and indirect influence that the sovereign has on financial institutions operating in the country”.
The agency also credited the Insolvency and Bankruptcy Code (IBC), introduced in 2016, for strengthening the payment culture and rule of law. “The code has tilted the balance in favour of the creditors. It has also promoted a credit culture that encourages restructuring of going-concern entities,” it said.
Separately, S&P had raised credit ratings of major state-run and private corporations, including ONGC, Power Grid Corporation of India, NTPC, and Tata Power, to ‘BBB’ from ‘BBB-‘. The outlooks were marked stable. India Exim Bank and Indian Railway Finance Corporation (IRFC) also received upgrades to ‘BBB’ from ‘BBB-‘.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
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