Country's largest lender State Bank of India(SBI) today said Moody's downgrade of the Indian banking sector was uncalled for, as domestic banks are well- regulated.
The ratings agency downgraded Indian banking system from 'stable' to 'negative' on concerns over asset quality, capitalisation and profitability, amid global slowdown. Moody's decision will make overseas borrowings for Indian banks costlier.
"We believe Indian banks are very well-regulated, well- audited and there is a greater scrutiny," SBI Chairman Pratip Chaudhuri said, adding that other factors such as lesser degree of leveraging, abhorring exotic assets and having no hidden surprises underneath also help domestic banks.
Rating agencies are "stung" by the experience elsewhere and "like to believe the worst for banks", he said.
"Banks across the world are being increasingly suspect about their assets and what is underneath...that is why this response (of the downgrade by Moody's)."
The downgrade will not affect its ability to raise funds abroad, SBI's managing director Hemant Contractor told reporters here.
Moody's decision triggered intense selling in stock markets. The BSE Banking Index ended 2.62 per cent down. The The BSE benchmark Sensex also tumbled by 1.18 per cent.
Earlier in September, another rating agency Standard & Poor's had downgraded country's largest lender SBI's rating to D+ from C- on account of worsening asset quality. This had also evoked sharp criticism from the government.
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