Moody's Investors Service, the global ratings agency, has placed
India's three top private sector lenders ICICI Bank, HDFC Bank and Axis Bank on review for possible downgrade.
The review is expected to be concluded in three months and is mainly because of lower sovereign ratings of India. Standalone credit assessment ratings of these lenders are currently positioned above India's sovereign debt rating.
"Moody's expects to position the standalone credit assessments of most banks globally at (or below) the rating of the sovereign where the bank is domiciled," Moody's said in a report.
All the three lenders enjoy Baa2 foreign currency long-term ratings from Moody's. This is a medium grade rating and shows that these companies have acceptable ability to repay short-term debt.
Ratings agency
Standard & Poor's last week cut its outlook on India's sovereign ratings and
leading lenders, including ICICI Bank, HDFC Bank, and Axis Bank, to negative from stable.
A
downgrade in rating means that the government or companies are less capable to meet their debt obligations. This results in higher cost to borrowings. Also it becomes difficult for the firms and the government to raise money from overseas markets.
Moody's said during the review it will assess the degree to which the company's standalone credit profile is correlated with that of the sovereign.
The reviews will take into account the extent to which the banks' business depends on the domestic macroeconomic and financial environment; the degree of reliance on market-based, and therefore more confidence-sensitive, funding; and direct or indirect exposures to domestic sovereign debt, compared with their capital bases, it said.
With IANS inputs 
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