S&P Upgrades Ratings Of SBI, HDFC, ICICI, Axis, Kotak And Other Banks After India’s Sovereign Boost

S&P Global Ratings has upgraded the ratings of 10 major Indian financial institutions, just days after lifting India’s sovereign credit rating for the first time in 18 years.

The global rating agency said the improvements reflect India’s strong economic fundamentals, better policy settings, and structural reforms that have strengthened the financial system.

Earlier this week, S&P had raised India’s sovereign ratings to ‘BBB/Stable/A-2’ from ‘BBB-/Positive/A-3’.

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7 Leading Banks And 3 NBFCs Rating Upgrade

The agency highlighted that India’s economy averaged 8.8% growth between FY22 and FY24, the highest in the Asia-Pacific region, and is expected to grow at around 6.8% annually over the next three years.

With inflationary expectations better managed and reforms such as the Insolvency and Bankruptcy Code (IBC) improving loan recoveries, S&P expects Indian banks and finance companies to remain stable.

Following the sovereign upgrade, long-term issuer credit ratings were raised for seven leading banks – State Bank of India, ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Union Bank of India, and Indian Bank.

In addition, three finance companies – Bajaj Finance, Tata Capital, and L&T Finance – also saw their ratings upgraded.

Why Did S&P Upgrade Ratings?

S&P explained that many ratings on Indian financial institutions are closely tied to the sovereign rating, given the government’s direct and indirect influence over the sector.

The agency also noted that credit risks have reduced in recent years, with the IBC cutting resolution time for stressed loans from 6–8 years earlier to less than two years now. Recovery values have also improved significantly.

Separately, S&P had earlier upgraded ratings of other Indian entities, including Oil and Natural Gas Corp. (ONGC), Power Grid Corp., NTPC, and Tata Power to ‘BBB’ from ‘BBB-’. Export-Import Bank of India (Exim Bank) and Indian Railway Finance Corp. (IRFC) were also upgraded.

Overall, S&P said India’s financial institutions are well-positioned to ride the country’s growth momentum, with adequate asset quality, improved profitability, and stronger capitalisation expected in the next 12–24 months.