S&P Global Upgrades Long-Term Ratings For 10 Indian Financial Institutions

Rating agency S&P Global has raised long-term ratings on top Indian banks after recently upgrading the south Asian nation's rating from BBB- to BBB.

The New-York headquartered rating firm said, "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."

The banks that had their credit ratings upgraded are Kotak Mahindra Bank, Union Bank of India, Indian Bank, State Bank of India, ICICI Bank, HDFC Bank, and Axis Bank Ltd.

The three companies Bajaj Finance, Tata Capital, and L&T Finance.

"We expect India's banks to maintain adequate asset quality, good profitability, and enhanced capitalization over the next 12-24 months. This is despite some pockets of stress," S&P said, adding, credit risk in the system has reduced.

The ratings on many Indian financial institutions are capped by our sovereign rating on India. This is due to the direct and indirect influence that the sovereign has on financial institutions operating in the country, S&P said.

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It also said that the insolvency and bankruptcy code (IBC) has improved the payment culture and rule of law in India. The code, introduced in 2016, has tilted the balance in favour of the creditors. It has also promoted a credit culture that encourages restructuring of going-concern entities.

On Thursday, S&P Global Ratings had also raised credit ratings on Oil and Natural Gas Corp. Ltd. (ONGC), Power Grid Corp. of India Ltd., NTPC Ltd., and Tata Power Co. Ltd. to 'BBB' from 'BBB-'. The outlooks are stable.

S&P Global Ratings also raised its long-term issuer credit ratings on the Export-Import Bank of India (India Exim) and Indian Railway Finance Corp. (IRFC) to 'BBB' from 'BBB-'.