Fitch lowers rating outlook of SBI, ICICI, PNB among others

The action follows the revision earlier this week of India's outlook to negative.

"The outlook revision of the financial institutions reflects their close linkages with the sovereign by virtue of their high exposure to domestic counterparties and holdings of domestic sovereign debt," Fitch said in a statement.

The list of downgraded entities include six government banks (including an international banking subsidiary of a government bank), two private banks. These include Bank of Baroda, Bank of Baroda (New Zealand) Ltd (BOBNZ), Canara Bank, and IDBI Bank.

Besides two wholly owned government institutions -- Export-Import Bank of India and Housing and Urban Development Corporation Ltd have also been similarly downgraded. Besides, the outlook of IDFC Ltd and Indian Railway Finance Corporation Ltd outlook has also become negative.

However, Fitch said the banks continue to have reasonable customer deposit base, domestic franchises and adequate capital.

The non-banking financial entities, meanwhile, lack the funding advantage, which puts them more at risk during times of increased market volatility, it said. MORE