This follows an upgrade of India’s sovereign credit rating by Moody’s to stable from negative on October 5
Global ratings agency Moody’s on October 6 changed the rating outlook of nine Indian banks to “stable” from “negative”. These lenders include Axis Bank, Bank of Baroda, Canara Bank, HDFC Bank, ICICI Bank, Punjab National Bank, Export-Import Bank of India, State Bank of India (SBI) and Union Bank of India.
The upgrade comes a day after the ratings agency upgraded India’s sovereign credit rating outlook to “stable” from “negative”, citing an improvement in the financial sector and faster-than expected economic recovery across sectors.
Also, the list includes Hero Fincorp, Housing and Urban Development Corp, Indian Railway Finance Corporation Limited , Indian Renewable Energy Development Agency Ltd., Power Finance Corporation Limited (PFC) and REC Limited (REC).
Announcing the move, Moody’s said with higher capital cushions and greater liquidity, banks and non-bank financial institutions pose much lesser risk to the sovereign than previously anticipated.
“And while risks stemming from a high debt burden and weak debt affordability remain, Moody’s expects that the economic environment will allow for a gradual reduction of the general government fiscal deficit over the next few years, preventing further deterioration of the sovereign credit profile,” the agency said.
The agency maintained India’s sovereign rating at ‘Baa3’.
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