S&P upgrades ratings of 10 Indian financial institutions following sovereign action
S&P Global Ratings upgraded long-term issuer credit ratings of seven Indian banks and three finance companies after raising India's sovereign rating to 'BBB/Stable/A-2', the first upgrade in 18 years. The agency cited strong growth momentum, better inflation management, and structural reforms like the Insolvency and Bankruptcy Code, which improved recovery and credit culture, reducing systemic risk for financial institutions.
ANI S&P Global Ratings has upgraded as many as 10 Indian financial institutions, following a similar action on the sovereign credit rating on India. They raised the long-term issuer credit ratings on seven Indian banks and three finance companies.
Following is a table with the list of companies along with their rating upgradation:The global rating agency expects India's sound economic fundamentals to underpin growth momentum over the next two to three years. In addition, they believe monetary policy settings have become increasingly conducive to managing inflationary expectations.
It has earlier this week upgraded India's sovereign ratings to 'BBB/Stable/A-2' from 'BBB-/Positive/A-3'. India has received its first sovereign credit rating upgrade in 18 years."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," S&P Global Ratings said in a statement on August 15.They expect India's banks to maintain adequate asset quality, good profitability, and enhanced capitalisation over the next 12-24 months, despite some pockets of stress.It argued 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. The IBC has reduced the average resolution time for bad loans to less than two years now, according to official data, from six to eight years earlier. Recovery values have also improved to more than 30 per cent, from 15-20 per cent under the previous bankruptcy regime," their report read.It underlines that credit risk in the system has reduced.India's real GDP growth averaged 8.8 per cent between fiscal years 2022 and 2024 -- the highest in the Asia-Pacific region -- and S&P expects this strength to continue, projecting average growth of 6.8 per cent annually over the next three years.
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