Stable system outlook driven by five factors, including operating environment and government support
Moody's also that said it expects limited policy rate cuts over the next 12 months, which should help stabilise Net Interest Margin
Officials say that the case for a ratings upgrade has been the strongest in years, given the various actions on the economic and fiscal front
Moody's further said inclusion of corporate bonds in the RBI liquidity adjustment facility will benefit corporates
Cautions that risks to banking sector remain
Policies like relaxation of thresholds for FDI and a change in the monetary policy framework that fosters credibility will contribute to more stable economic environment
India's sovereign rating by Moody's stands at 'Baa3', the lowest investment grade and just a notch above 'junk' status
Protectionist measures taken by the government to help steel industry perform well against Asian peers, it said
Will lead to structural improvements in banks dealing with bad assets
The inflation target until March 31, 2021, was notified by the central government on Friday in consultation with the RBI
India's inflation rate has halved in the last three years, in part thanks to policies Raghuram Rajan has overseen during his time as RBI governor
Indian Housing Finance Companies (HFCs) need to work on underwriting standards for affordable home loans to control credit risks, according to Moody's
Shares of Central Bank jumped 3.08% to Rs 100.55, while IOB gained 0.18% to Rs 27.20 on BSE
Moody's does not expect the UK's vote to leave the European Union to have a significant credit impact on Asia Pacific sovereigns
India faces challenge on lacklustre global demand
It said India's medium-term potential will, however, be supported by gradual implementation of further policy reforms
State Bank of India in May had announced that it will merge with six banks, including five associate banks
Barring significant government support to boost the banks' capitalization, the risks arising from the potential consolidation currently outweigh the potential longer-term benefits, Moody's said
India announced last week sweeping reforms to rules on foreign direct investment and easier terms for investors
The new tax regime would lift post-tax investment returns from securitisation trusts