Moody's: Indian banks' positive view reflects robust credit growth

Moody's Investors Services said the stable to positive outlook for India's banking system reflects the country's robust credit growth against a favorable economic environment as well as improvements in the banks' overall financial metrics.

At the same time, Moody's noted the need for ongoing technological transformation, which remains a challenge for the public sector banks, together with the inflexible and inefficient labor force that hampers the competitiveness of government-owned banks, while economic reforms are difficult to achieve and there is a need for additional infrastructure development.

The revised methodology resulted in upgrades to the foreign currency bond ceilings of a number of countries. The higher ceilings reflect Moody's view that in many countries, even if the government were to default on its own foreign currency debt, the probability of a foreign currency moratorium is less than 100%.

Below is a list of affected financial institutions in India including the rating changes resulting from the application of the methodology. The rated entity is listed together with the rated class of debt, the change in the rating, and the outlook:

State Bank of India: Subordinated MTN (foreign currency) - upgraded to Baa2 from Baa3; Outlook remains stable;

ICICI Bank Ltd: Senior unsecured (foreign currency) - upgraded to Baa2 from Baa3; Outlook changed to stable from positive; Senior unsecured MTN (foreign currency) - upgraded to Baa2 from Baa3; Outlook changed to stable from positive; Subordinated MTN (foreign currency) - upgraded to Baa2 from Baa3; Outlook remains stable;

Bank of India: Senior unsecured (foreign currency) - upgraded to Baa2 from Baa3; Outlook remains stable; Senior unsecured MTN (foreign currency) - upgraded to Baa2 from Baa3; Outlook remains stable; Subordinated MTN (foreign currency) - upgraded to Baa2 from Baa3; Outlook remains stable;

IDBI Ltd: Senior unsecured (foreign currency) - upgraded to Baa2 from Baa3; Outlook remains stable.

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