InvestorQ : What has triggered Moody’s to upgrade the ratings of Indian banks?
Chandralekha Desai made post

What has triggered Moody’s to upgrade the ratings of Indian banks?

Answer
image
NISHA Nayak answered.
2 months ago
Follow

Let me clarify that Moody’s has raised the rating outlook and not the rating of Indian banks. The rating outlook has been upgraded by Moody’s for the Indian banks from “Negative” to “Stable”. This outlook upgrade is in the midst of the asset quality stabilizing and improving as well as enhanced capital buffers. In addition, the rating agency has also pointed out that the improving operating environment should support asset quality in the future too.

As a result of these two factors, the effective credit cost for the banks is expected to come down sharply. Moody’s also added that while the quality of retail loans had deteriorated in the last few months, the impact would be marginal. To compensate, the quality of corporate loans had improved. Capital adequacy ratio of the banking system has sharply improved from 9.9% in FY19 to 11.1% in FY21 and that triggered the upgrade.

3 Views