Global rating agency Moody's today downgraded local currency bank deposit ratings and senior unsecured ratings of three biggest private lenders, ICICI Bank, HDFC Bank and Axis Bank, on a change in its fundamental view about government support to such instruments.
"The downgrade is driven by the change in Moody's view that the capacity for government support is limited to a government's bond rating, rather than Moody's previous expectation that banks in India could benefit from additional support through other policy tools," it said in a note.
Accordingly, the local currency bank deposit ratings and the senior unsecured ratings of three Indian private sector banks have been downgraded to Baa3/P-3 from earlier Baa2/P-2.
The foreign currency deposit rating of these three banks has been affirmed at Baa3/P-3 and the outlook on their long-term ratings has been changed to positive from stable, in line with the review of the sovereign rating announced earlier during the day.
In a big vote of confidence in the Modi government, rating agency Moody's raised India's credit outlook to 'positive', while Fitch projected faster growth -- raising hopes for an upgrade in its sovereign rating in the next 12-18 months.
This was followed up with assigning positive outlooks to 12 Indian government-owned financial institutions, including the country's largest lender SBI.
On Thursday, the ICICI Bank scrip gained 1.65 per cent to Rs 320.60, HDFC Bank was up 1.98 per cent to Rs 1,056.20.
Axis Bank was up 2.88 per cent to Rs 572.20 at the close of trade on the BSE, with the 30-share Sensex gaining 0.62 per cent.