Action follows change in outlook on India's rating.
Global rating
agency Fitch
on Monday revised the outlook from “stable” to “negative” on the Long-Term
Issuer Default Ratings (IDR) of nine Indian banks following revision in the
outlook on India rating ('BBB-'). It affirmed rating on IDRs, Support Ratings
(SR) and Support Rating Floors (SRF).
The rating action
covers nine banks - State
Bank of India (SBI), Bank of Baroda (BOB), BOB’s subsidiary in New Zealand,
Bank of India (BOI), Canara Bank (Canara), Punjab National Bank (PNB), ICICI
Bank (ICICI), Axis Bank (Axis) and Export-Import Bank of India (EXIM).
The IDRs for
Indian banks are support-driven and anchored to their respective SRFs. They are
based on assessment of high to moderate probability of extraordinary state
support for these banks. This takes into account our assessment of the
sovereign's ability and propensity to provide extraordinary support, Fitch said
in a statement.
The rating action
does not affect the banks' Viability Ratings (VRs). EXIM does not have a VR as
its role as a policy bank makes an assessment of its standalone credit profile
less meaningful.
On June 18, 2020,
Fitch changed outlook on India to Negative from Stable due to the impact of the
escalating coronavirus pandemic on India's economy.
The Negative
Outlook on India's reflects an increasing strain on the state's ability to
provide extraordinary support. The sovereign has limited fiscal space and there
has been significant deterioration in fiscal metrics due to challenges from the
Covid-19 pandemic, rating agency added.
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