The assessment score of the country's banking sector was revised by S&P

Mumbai: The assessment for the banking sector of the country has been increased by S&P Global from 6 to 5. According to a report by S&P, the assessment has been increased considering the strong recovery in India's financial sector.

India's Banking Industry Country Risk Assessment, an index of the country's financial sector, has been upgraded from 6 to 5, said S&P Global.

Risk scores are given between 1 and 10, with a score of 10 indicating the highest risk. "We believe the banks' asset quality will continue to strengthen on the back of fundamental improvements in the business environment and a positive outlook for economic growth," the rating agency noted.

It has also upgraded four financial institutions and increased credit profile assessments of some banks. The financial institutions that have been upgraded include Bajaj Finance, Hero Fincorp, Shriram Finance and Union Bank of India.

"We expect the improvement in the capital position of India's financial institutions, particularly public sector banks, will continue," he said. As banks are forced to increase deposit rates, their margins are likely to be affected.