SBI, ICICI, HDFC, and more: S&P Global lifts ratings of 10 banks and finance firms

S&P Global Ratings on Friday upgraded the ratings of ten major Indian financial institutions, including State Bank of India, HDFC Bank, and Tata Capital, following its decision to raise India’s sovereign credit rating after more than 18 years.

The agency said Indian lenders and financiers are set to gain from strong domestic economic momentum, structural reforms, and improvements in bad loan recovery mechanisms. “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 Global Ratings said.

Seven banks-State Bank of India, ICICI Bank, HDFC Bank, Axis Bank Ltd., Kotak Mahindra Bank, Union Bank of India, and Indian Bank-received long-term issuer credit upgrades. Three finance companies-Bajaj Finance, Tata Capital, and L&T Finance-were also upgraded.

The agency highlighted that credit risks in India have declined, and banks are expected to sustain “adequate asset quality, good profitability, and enhanced capitalization over the next 12–24 months” despite pockets of stress.

The sovereign rating upgrade on Thursday lifted India to ‘BBB’ from ‘BBB-’, a change S&P had not made since 2006. The agency cited India’s resilient economic fundamentals and more favorable monetary settings to control inflation as core drivers of the decision. Because financial institutions are tied closely to the sovereign, their ratings generally cannot exceed that of the country.

S&P also credited the Insolvency and Bankruptcy Code (IBC) of 2016 with reshaping India’s credit culture. It noted that the legislation tilted the balance in favor of creditors, improved payment discipline, and encouraged restructuring of viable companies instead of liquidation.

Beyond banks and financiers, S&P extended upgrades on Thursday to large state-owned and private sector enterprises. Oil and Natural Gas Corp. Ltd., Power Grid Corp. of India Ltd., NTPC Ltd., and Tata Power Co. Ltd. were raised to ‘BBB’ from ‘BBB-’. Export-Import Bank of India and Indian Railway Finance Corp. received similar upgrades, with stable outlooks maintained across all.