On Friday, S&P Global Ratings revised its ratings from 'stable' to 'negative' on ICICI Bank and Axis Bank as "heightened economic risks facing India's banking system may affect the creditworthiness of these banks."
"In our base case, other private sector peers such as HDFC Bank and Kotak Mahindra Bank have stronger asset quality and would be able to withstand the weakness in operating conditions," the rating agency added in its statement.
"We affirmed the ratings on all other Indian banks and their outstanding issuances. At the same time, we revised downward our assessment of the SACP of Indian Bank by one notch to 'BB+'," it said. SACPs are Special Agriculture Credit Plans.
These rating revisions were in the reflection of the risks from challenging operating conditions due to the COVID-19 pandemic.
On the same account, it also lowered the ratings on five NBFCs (non-banking finance companies) including Shriram Transport Finance, Bajaj Finance, Mannapuram Finance, Muthoot Finance and Power Finance Corporation.
S&P Global Ratings said that NBFCs will be more adversely affected by the economic risks of COVID-19 as these institutions lend to the weaker customers. Also, the sector has been facing existing pressure since the 2018 default of IL&FS group.