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Global ratings agency Fitch revised outlook on long-term issuer default ratings (IDR) of financial sector entities including banks from “Negative” and “Stable” on Wednesday, following an upgrade in the outlook last week, on India’s sovereign rating from “BBB-” to “Stable”.
The financial institutions that saw change in outlook are State Bank of India, Bank of Baroda (BOB) and its subsidiary in Newland, Bank of India, Canara Bank, Punjab National Bank, ICICI Bank and Axis Bank and Export and Import Bank of India.
The rating agency has affirmed their IDRs.
Fitch has also affirmed the Government Support Ratings (GSRs) for seven indtitutions and the Shareholder Support Rating (SSR) on Bank of Baroda (New Zealand) Ltd.
Fitch’s revised outlook on Indian sovereign to “Stable” from due to diminished downside risks to country’s medium-term growth, which is underscored by its rapid economic recovery and easing financial-sector weaknesses.
The IDRs for all the above Indian banks are support-driven and anchored to their respective GSRs. They are based on Fitch’s assessment of high to moderate probability of extraordinary state support for these banks. This takes into account assessment of the sovereign’s ability and propensity to provide extraordinary support, it added.
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