S&P Upgrade Boosts Ratings of 10 Indian Lenders

S&P Global Ratings on Friday upgraded the credit ratings of 10 leading Indian financial institutions, a move that followed India’s sovereign credit rating upgrade after nearly two decades.

The long-term issuer credit ratings were raised for seven major banks: State Bank of India (SBI), ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Union Bank of India, and Indian Bank. Three financial companies, Bajaj Finance, Tata Capital, and L&T Finance, also received upgrades.

India’s financial institutions will continue to ride the country’s strong economic growth momentum. These entities will benefit from their domestic focus and structural improvements in areas such as the recovery of bad loans,” S&P said in its statement.

Sovereign Rating Lifted to ‘BBB’

The upgrade came a day after S&P lifted India’s long-term sovereign credit rating from BBB- to BBB, with a stable outlook. This places India in the same category as Mexico, Indonesia, and Greece, and marks the first such upgrade in 18 years.

S&P attributed the move to India’s economic resilience, fiscal consolidation, and better quality of public spending. The agency also pointed to India’s buoyant growth and a monetary policy framework that helps anchor inflation expectations.

Market Reaction

The announcement was welcomed by the Ministry of Finance, which noted that India had managed to combine fiscal discipline with increased investments in infrastructure and growth initiatives. “India will continue its buoyant growth momentum and undertake further reforms to achieve the goal of Viksit Bharat by 2047,” the ministry said.

Financial markets reacted positively. India’s 10-year bond yield fell sharply to 6.38 per cent before closing at 6.40 per cent, marking its largest single-day drop in two months. The rupee also strengthened, ending at 87.56 against the US dollar.

Global Context

S&P acknowledged that recent US tariffs on Indian goods could temporarily weigh on growth but maintained that India’s long-term outlook remains strong. The agency projects India’s GDP to grow 6.5 per cent this financial year, supported by robust consumer demand and continued government spending.

While Fitch Ratings and Moody’s still maintain India at the lowest investment grade with a stable outlook, analysts believe S&P’s decision strengthens India’s appeal among global investors. Policy continuity after the upcoming state elections could further support reforms and fiscal stability.