Indian banks may find it a little easier now to boost their capital adequacy by borrowing at a lower cost and raising equity capital both from the domestic and overseas markets as rating upgrade by Moody’s Investors Service would improve investor confidence.Even if the other two global rating firms – Fitch and S&P – do not follow it in a hurry, investors expect at least a 25 basis points reduction in borrowing costs for state-run banks which have been reeling under stress with steep sticky loan ratios and shrinking capital ratios.“With the ratings upgrade, the borrowing cost for India and its corporates will come down,” State Bank of India chairman Rajnish Kumar said. “Foreign investors who have been constrained in the past can also increase their investment limits. This is a reaffirmation of how the world and international investors view India.” Moody's Investors Service has also upgraded the long-term ratings of four Indian financial institutions including SBI to Baa2 from Baa3. The other three are Export-Import Bank of India, HDFC Bank and Indian Railway Finance Corporation.“It’s a reflection of a lot of action by the government. Bank of Baroda will next week discuss a plan to raise Rs 6,000 crore via QIP or rights issue.

Source: Economic Times November 17, 2017 12:33 UTC