Fitch downgrades 9 banks, including SBI and ICICI

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New Delhi, Monday 22 June 2020

Fitch Ratings on Monday said it has improved the outlook of nine Indian banks, including State Bank of India and ICICI Bank, from stable to negative. The move comes in the wake of a change in India's sovereign rating in view of the impact of the Corona virus epidemic on the economy.

The rating agency downgraded the outlooks of State Bank of India, Bank of Baroda (New Zealand), Bank of India, Canara Bank, Punjab National Bank, ICICI Bank, Axis Bank and Export-Import Bank of India. However, the agency has maintained their current ratings. Fitch also maintained the rating of IDBI Bank Ltd. but kept the outlook negative.

The rating agency said in a statement that the move comes after India's BBB minus rating was downgraded from Outlook to negative on June 18, 2020. The action has been taken in view of the growing impact of the Corona virus epidemic on the Indian economy.

The agency says the negative outlook for India's sovereign rating also reflects growing pressure on the government's ability to provide adequate assistance. This situation is due to the deteriorating mathematics of the financial sector due to the Kovid-19 epidemic and the limited financial possibilities before it.

The agency said the move would not affect banks' viability rating (VR). Exim Bank does not have VR as its role is that of a policy bank. The strategic and systemic importance of the bank is very high,

While SBI is the largest Indian bank with a 25 per cent market share. "It is possible that SBI may also get government support, if needed, general government support as it is very important in the whole system. "

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