Moody’s Investors Service downgraded the deposit ratings of India’s three biggest private-sector banks, saying the government’s capacity to support them is limited.
The company cut the local-currency deposit and senior unsecured ratings of ICICI Bank Ltd., HDFC Bank Ltd. and Axis Bank Ltd. one level to Baa3/P-3, Moody’s said in a statement on Thursday. The outlook on the long-term ratings of the three banks was raised to positive from stable, in line with Moody’s upward revision of the outlook on India’s Baa3 bonds, the statement showed.
The downgrade is “driven by the change in Moody’s view that the capacity for government support is limited to a government’s bond rating, rather than Moody’s previous expectation that banks in India could benefit from additional support through other policy tools,” it said.
The S&P BSE Bankex index, a gauge of 12 Indian lenders, advanced 1.9 percent as of 11:38 a.m. in Mumbai trading. ICICI Bank gained 1.7 percent, HDFC Bank rose 1.7 percent and Axis Bank added 2 percent.