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Key Points

S&P Global has upgraded 10 Indian financial institutions following India's first sovereign rating boost in 18 years. The agency highlights India's 8.8% GDP growth and improved bankruptcy resolution under IBC reforms. Recovery rates for bad loans have doubled to 30% since the new insolvency law took effect. S&P expects India's banking sector to maintain strong asset quality and profitability through 2025.

Key Points: S&P Upgrades 10 Indian Banks After Sovereign Rating Boost

  • S&P upgrades 7 banks & 3 finance firms post sovereign rating hike
  • India’s GDP growth leads Asia-Pacific at 8.8% average
  • IBC reforms cut bad loan resolution time to under 2 years
  • Recovery rates doubled to 30% under new bankruptcy regime
2 min read

S&P upgrades ratings of 10 Indian financial institutions following sovereign action

S&P Global raises ratings for 10 Indian financial institutions, citing strong economic growth and improved credit culture under IBC reforms.

"India's financial institutions will continue to ride the country's good economic growth momentum. – S&P Global Ratings"

Singapore, August 17

S&P Global Ratings has upgraded as many as 10 Indian financial institutions, following a similar action on the sovereign credit rating on India.

Singapore, August 17 (ANI): S&P Global Ratings has upgraded as many as 10 Indian financial institutions, following a similar action on the sovereign credit rating on India.

They raised the long-term issuer credit ratings on seven Indian banks and three finance companies.

Following is a table with the list of companies along with their rating upgradation:

The global rating agency expects India's sound economic fundamentals to underpin growth momentum over the next two to three years.

In addition, they believe monetary policy settings have become increasingly conducive to managing inflationary expectations.

It has earlier this week upgraded India's sovereign ratings to 'BBB/Stable/A-2' from 'BBB-/Positive/A-3'. India has received its first sovereign credit rating upgrade in 18 years.

"India's financial institutions will continue to ride the country's good economic growth momentum. These entities will benefit from their domestic focus and structural improvements in the system such as in the recovery of bad loans," S&P Global Ratings said in a statement on August 15.

They expect India's banks to maintain adequate asset quality, good profitability, and enhanced capitalisation over the next 12-24 months, despite some pockets of stress.

It argued that the Insolvency and Bankruptcy Code (IBC) has improved the payment culture and rule of law in India.

The code, introduced in 2016, has tilted the balance in favour of the creditors.

"It has also promoted a credit culture that encourages restructuring of going-concern entities. The IBC has reduced the average resolution time for bad loans to less than two years now, according to official data, from six to eight years earlier. Recovery values have also improved to more than 30 per cent, from 15-20 per cent under the previous bankruptcy regime," their report read.

It underlines that credit risk in the system has reduced.

India's real GDP growth averaged 8.8 per cent between fiscal years 2022 and 2024 -- the highest in the Asia-Pacific region -- and S&P expects this strength to continue, projecting average growth of 6.8 per cent annually over the next three years.

- ANI

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Reader Comments

P
Priya S
While the upgrade is welcome, I wonder how much of this will actually benefit common people like us. Banks still charge high interest rates on loans while giving minimal returns on deposits 🤔
R
Rohit P
Great to see global recognition of India's economic reforms! The IBC has been a game-changer. Now if only we could get similar efficiency in other areas like tax disputes...
S
Sarah B
As an NRI investor, this makes India much more attractive for my portfolio. The reduced resolution time for bad loans is particularly encouraging. Time to increase my exposure to Indian markets!
K
Karthik V
The rating upgrade is good but we must not become complacent. Many small businesses still struggle to get timely credit from these same banks. Hope this positive outlook translates to easier access to capital for MSMEs.
D
Divya L
Finally some good news after all the global recession talks! 8.8% average GDP growth is impressive 👏 Hope this leads to more job creation and better salaries in the banking sector.

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