S&P; Global Upgrades Ratings of SBI, HDFC Bank, and 8 Other Finance Firms

A day after upgrading India’s sovereign credit rating, S&P Global Ratings on Friday raised the ratings of 10 leading Indian financial institutions, including top banks and non-banking finance companies (NBFCs).

The upgrade covers seven banks, the State Bank of India, ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Union Bank of India, and Indian Bank, and three finance firms, Bajaj Finance, Tata Capital, and L&T Finance.

"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 said in its note. 

The rating agency added that it expects Indian banks to maintain "adequate asset quality, good profitability, and enhanced capitalization over the next 12–24 months," despite "some pockets of stress," noting that overall credit risk in the system has eased.

The move follows S&P’s sovereign upgrade of India to ‘BBB’ on Thursday, the country’s first upgrade in more than 18 years. The agency cited strong economic fundamentals and a supportive monetary policy framework as key factors underpinning India’s growth outlook over the next 2–3 years.

S&P pointed out that the ratings of financial institutions are typically capped by the sovereign rating, given the direct and indirect influence the government holds over banks and NBFCs.

The agency also highlighted structural reforms, particularly the Insolvency and Bankruptcy Code (IBC), as instrumental in strengthening India’s credit culture. Since its introduction in 2016, the IBC has "tilted the balance in favour of creditors" and promoted timely restructuring of stressed but viable entities, S&P said.

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