S&P Global Upgrades Credit Ratings: S&P says Indian banks will maintain their asset quality, profitability, and capitalisation over the next 12 to 24 months, even as pressure remains in some sectors.

S&P Global Upgrades Credit Ratings: After upgrading India's rating, global rating agency S&P has now raised the rating of 10 big financial institutions, including SBI, HDFC Bank and Tata Capital. This step was taken by the US agency on Friday. A day earlier, on Thursday, S&P had raised India's sovereign credit rating to 'BBB' after more than 18 years.

S&P Global Ratings said that India's financial institutions will continue to benefit from the country's strong economic growth. The agency believes that these institutions will benefit from the focus on the domestic sector and the structural reforms taking place in the system.

Rating of seven banks increased

The global rating agency has upgraded the ratings of seven Indian banks—State Bank of India, ICICI Bank, HDFC Bank, Axis Bank Ltd, Kotak Mahindra Bank, Union Bank of India and Indian Bank. Apart from this, the long-term credit rating of three financial companies—Bajaj Finance, Tata Capital and L&T Finance—has also been increased.

S&P says that Indian banks will maintain their asset quality, profitability and capitalization in the next 12 to 24 months, even if pressure remains in some sectors. The agency also said that credit risk in the banking system has decreased.

What will be its benefit?

The ratings of many financial institutions are limited to India's sovereign credit rating, as the government has a direct and indirect impact on the banking system. The agency said that the Insolvency and Bankruptcy Code (IBC) has significantly improved the payment culture and rule of law in India. The most interesting thing is that the US agency improved India's sovereign credit rating at a time when President Donald Trump had earlier described the Indian economy as a "dead economy".