Fitch boosts Indian banks

Fitch Ratings said it upgraded to 2 from 3 the support ratings of several Indian banks, including ICICI Bank, Punjab National Bank, Canara Bank, Bank of Baroda, Bank of India, Union Bank of India and IDBI Ltd.

The support ratings of HDFC Bank, UCO Bank, Indian Overseas Bank, Oriental Bank of Commerce and Allahabad Bank were upgraded to 3 from 4.

The agency also upgraded IDBI's long-term foreign-currency issuer default rating to BBB- from BB+, along with its individual rating to C/D from D/E. The other ratings of all of the banks are affirmed.

The actions reflect the Indian government's improved ability to provide timely support to systemically important banks as reflected in the government's long-term foreign-currency issuer default rating of BBB-, Fitch said.

Fitch noted that the Indian authorities have historically had a high propensity of supporting troubled banks either through direct recapitalization or by merging them with healthy ones, although the government's ability to do so was previously constrained by its non-investment grade rating, the agency said. Together with the improving financial condition of most banks and the contingent liability on the government, Fitch said it believes that it can now permit a slightly larger number of Indian banks with support ratings of 2 and/or 3.

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