Standard & Poor's Ratings Services has revised the outlook on its long-term counterparty credit ratings on 11 financial institutions to negative from stable.
The 11 institutions are: Axis Bank, Bank of India, HDFC Bank, ICICI Bank, IDBI Bank, Indian Overseas Bank, Indian Bank, Infrastructure Development Finance Company, State Bank of India, Syndicate Bank, and Union Bank of India.
The global credit rating agency, however, affirmed its long-term and short-term counterparty credit ratings as well as issue ratings on all these financial institutions.
The outlook revision on the financial institutions follows S&P revising the outlook on India's long-term rating to negative from stable due to slow fiscal progress and deteriorating economic indicators.
S&P cautioned that it could lower the ratings on these financial institutions if: it lowers the sovereign rating; or the standalone credit profiles of these financial institutions deteriorate sharply. It, however, said that such deterioration (in credit profiles) is unlikely in most cases.
The rating agency observed that, the sovereign is able to influence Indian banks because: the banks are subject to government policy and regulation; they invest a significant portion of their funds in government securities; a high proportion of their revenue comes from domestic operations; and most of them are majority owned by the government.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.