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S&P Global on Friday upgraded the ratings of 10 leading Indian financial institutions, including SBI, HDFC Bank, and Tata Capital, news agency PTI reported. The decision came a day after the US-based agency lifted India’s sovereign credit rating for the first time in 18 years.
The long-term issuer credit ratings have been raised for seven banks — State Bank of India, ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Union Bank of India, and Indian Bank. In addition, three finance companies — Bajaj Finance, Tata Capital, and L&T Finance — also received an upgrade.
“India's financial institutions will continue to ride the country's good economic growth momentum. These entities will benefit from their domestic focus and structural improvements in the system such as in the recovery of bad loans," S&P said.
India’s sovereign rating raised to ‘BBB’
On Thursday, S&P upgraded India’s long-term sovereign credit rating to BBB from BBB-, with a stable outlook. This places India in the same category as Mexico, Indonesia, and Greece. It is India’s first sovereign upgrade by S&P in nearly two decades.
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S&P cited economic resilience, fiscal consolidation, and better quality of public spending as the main reasons for the move.
The rating upgrade comes days after US President Donald Trump announced a 50 per cent tariff on Indian goods and described the country as a “dead economy”. Analysts believe the improved rating will strengthen India’s case with international investors.
“India’s buoyant economic growth, against the backdrop of an enhanced monetary policy environment that anchors inflationary expectations, supported this upgrade,” S&P added.
India welcomes decision
The Ministry of Finance welcomed the decision, stressing that India has balanced fiscal consolidation with major investments in infrastructure and inclusive growth. “India will continue its buoyant growth momentum and undertake steps for further reforms to attain the goal of Viksit Bharat by 2047,” it said.
Following the announcement, India’s 10-year bond yield dropped sharply to 6.38 per cent before closing at 6.40 per cent — the biggest single-day fall in two months. The rupee also recovered some losses, ending at 87.56 against the US dollar.
S&P further noted that while tariffs from the US could cause a one-time dent to growth, the long-term outlook for India remains strong.
Outlook ahead
Fitch Ratings and Moody’s still keep India at the lowest investment grade with a stable outlook. However, S&P highlighted that India’s commitment to fiscal discipline and better spending quality has already strengthened its financial profile.
The agency expects India’s GDP to grow 6.5 per cent this financial year, supported by consumer demand and government investments. It also projected policy continuity after upcoming state elections, which could aid further reforms and fiscal consolidation.
(Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd)
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