The rating agency revised the viability rating from “bb+” to “bb” for Axis Bank, ICICI Bank and SBI
Rating agency Fitch has downgraded viability rating (VR) for four lenders – Axis Bank, Bank of Baroda, ICICI Bank
and State Bank of India – on rapid deterioration in the operating environment for banks
in India. The deterioration in operating environment follows the coronavirus
pandemic and measures to contain its spread.
The rating agency revised the viability rating from “bb+” to “bb” for Axis Bank, ICICI Bank
and SBI. For Bank of Baroda, agency revised VR from “bb” to “bb-“.
It affirmed Issuer Default Ratings (IDR) for seven banks
including these four and Bank of India, Canara Bank and Punjab National Bank.
Fitch has cut its forecast for India's Gross Domestic Product (GDP) growth in the financial year ending March 2021 (FY21) to 0.8 per cent from a pre-pandemic forecast of 5.1 per cent (FY20: 4.9 per cent). The revised estimate indicates the impact that the sharp slowdown in business and consumer activity is likely to have across sectors. It will create fresh asset-quality challenges for Indian banks, Fitch said.
Fitch lowered the operating environment score for Indian banks
to 'bb' from 'bb+' in March. It kept a negative outlook due to the uncertainty surrounding the severity and duration of the pandemic and the associated effects on India's banks from restrictions on economic activity.
This was despite relief measures implemented by the authorities to support the economy and protect borrowers, which indirectly benefit the banks, Fitch added.