Moody's may downgrade ratings of 13 banks

The global rating agency Moody's may downgrade ratings of 13 Indian banks, including bigwigs such as SBI and ICICI Bank, as the agency would now assess the government's ability to support the banking sector on the basis of the impact of the economic and financial crisis.

"Moody's Investors Service today placed the ratings of 13 Indian commercial banks on review for possible downgrade," the rating agency said.

The rating agency did so because it reformed its criteria of assessing India's ability to support the banking sector in the event of crisis in the sector.

The new criteria now looks at the extent to which India's ability to provide support to its banking system, if needed, is converging with the government's own debt capacity as a result of the ongoing global economic and credit crisis.

Factors that Moody's will consider for assessing the rating of banks include the size of the banking system in relation to the government's resources, the level of stress in the banking system, the foreign currency obligations of the banking system relative to the government's own forex resources and changes to the government's political patterns.

The banks whose ratings are placed under review are — SBI, ICICI Bank, PNB, Bank of Baroda, Bank of India, Canara Bank, HDFC Bank, IDBI Bank, Union Bank of India, Axis Bank, Central Bank of India, Syndicate Bank and Oriental Bank of Commerce.