Fitch hits major Indian FIs with 'negative’ rating

20 Jun 2012

1

Credit rating agency Fitch has expanded its rating action on India by revising outlook on all Indian financial institutions having close linkages with the government, including the Indian Railway Finance Corporation Limited (IRFC), to negative.

Fitch Ratings has revised the outlook on the 'BBB-' long-term foreign currency issuer default rating (IDR) of India-based financial institutions to negative from stable, while affirming the rating.

The outlook revision to 'negative' from 'stable' reflects their close linkages with the sovereign by virtue of their high exposure to domestic counterparties and holdings of domestic sovereign debt, Fitch said in a release today.

The downgrading of six PSU banks - State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Export-Import Bank of India, and a foreign subsidiary of Bank of Baroda (New Zealand) and two leading private sector lenders - ICICI Bank and Axis Bank, would negatively impact their borrowing power.

The rating agency also hit Housing and Urban Development Corporation Ltd (HIDCO), a wholly-owned government institution and infrastructure finance company Infrastructure Development Finance Company Ltd with `negative' outlook.

Separately, Fitch said pressures are building generally on the stand-alone credit profile of these institutions which will negatively impact viability ratings, given India's weakening economic and fiscal outlook, slowing business reforms and inflationary pressures that in turn could put further pressure on their future asset quality. VRs of banks with concentrated exposures to problematic sectors could be impacted more.

Business History Videos

History of hovercraft Part 3...

Today I shall talk a bit more about the military plans for ...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

view more