MUMBAI: Global ratings firm Moody’s has upgraded long-term foreign currency (FC) deposit ratings of 14 Indian banks, including the country’s largest bank State Bank of India (SBI), by one notch to Ba1 from Ba2 with a stable outlook. This reflects a slight improvement in the credit quality of the rated entities. This move has come in wake of the revision in India’s sovereign outlook by the ratings firm.
Among the banks which would be benefited by the ratings decision include Axis Bank, Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Export-Import Bank of India, HDFC Bank, ICICI Bank, IDBI Bank, Oriental Bank of Commerce, Punjab National Bank, State Bank of India, Syndicate Bank and Union Bank of India.
Moody’s has said that its rating action takes into account the fact that all Indian banks have a global local currency (GLC) deposit rating higher than Ba1 (speculative grade rating) and thus their FC deposit ratings have been constrained by India’s FC deposit ceiling.
According to Naresh Thakkar, MD, Icra, the Indian arm of the global ratings firm, the move is more technical in nature and is an alignment of foreign currency deposit ratings with the local currency ratings. The ratings firm has, however, clarified that other ratings assigned to these banks are unaffected by this rating action. Put simply, the ratings for other instruments are not impacted.
The last rating action for Axis Bank, Bank of Baroda, Bank of India, Canara Bank, HDFC Bank, ICICI Bank, State Bank of India and Union Bank of India was taken on 18 November 2009, when the debt component of their capital was placed on review for a possible downgrade due to Moody’s change to its rating methodology.
The last rating action for Central Bank of India, IDBI Bank, Oriental Bank of Commerce, Punjab National Bank and Syndicate Bank was taken on 21 October 2009, when their GLC deposit ratings were downgraded due to Moody’s adjustment of the systemic support indicator for India. The last rating action for Export-Import Bank of India was taken on 29 March 2007, when Moody's rated the bank's senior unsecured floating rate notes at Baa3.
Source : The Economic Times