Moody's assigns Counterparty Risk Ratings to 15 Indian banks

Moody's Investors Service has today assigned Counterparty Risk Ratings (CRRs) to 15 rated banks and their branches, as applicable.

The 15 Indian banks comprise: 1) Axis Bank Ltd, 2) Bank of Baroda, 3) Bank of India, 4) Canara Bank, 5) Central Bank of India, 6) HDFC Bank Limited, 7) ICICI Bank Limited, 8) IDBI Bank Ltd, 9) Indian Overseas Bank, 10) Oriental Bank of Commerce, 11) Punjab National Bank, 12) State Bank of India, 13) Syndicate Bank, 14) Union Bank of India, and 15) Yes Bank Limited.

At the same time, Moody's has upgraded the Counterparty Risk Assessments (CR Assessments) of Axis Bank Ltd, Bank of Baroda, ICICI Bank Limited and their branches, as applicable to Baa2(cr)/P-2(cr) from Baa3(cr)/P- 3(cr). The CR assessment of Punjab National Bank was upgraded to Baa3(cr)/P-3(cr) from Ba1(cr)/NP(cr).

Moody's Counterparty Risk Ratings are opinions of the ability of entities to honor the uncollateralized portion of non-debt counterparty financial liabilities (CRR liabilities) and also reflect the expected financial losses in the event that such liabilities are not honored. CRR liabilities typically relate to transactions with unrelated parties.

Examples of CRR liabilities include the uncollateralized portion of payables arising from derivatives transactions and the uncollateralized portion of liabilities under sale and repurchase agreements. CRRs are not applicable to funding commitments or other obligations associated with covered bonds, letters of credit, guarantees, servicer and trustee obligations, and other similar obligations that arise from a bank performing its essential operating functions.

RATINGS RATIONALE

The CRRs assigned to the 15 Indian banks are in line with the CR Assessments.

Because Moody's considers that India (Baa2 stable) does not have an operational resolution regime, in assigning CRRs to the Indian banks subject to these rating actions, Moody's applies its basic Loss Given Failure (LGF) approach. Moody's basic LGF analysis positions CRRs in line with the bank's CRA, one notch above the banks' adjusted BCAs, prior to government support.

The CRR also incorporates between zero to three notches of uplift due to Moody's assessment of government support for the 15 banks in times of need, based on the banks' systemic importance India. The uplifts are in line with those applied to the CR Assessments.

Source : Equity Bulls

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