Fitch Ratings has revised the outlook on the Long-Term Issuer Default Ratings (IDR) of nine Indian banks to Negative from Stable. This is on account of the impact of the escalating coronavirus pandemic on India's economy. This follows Fitch's India outlook rating revision on the 'BBB-' rating to Negative from Stable on June 18.

The banks include Export-Import Bank of India (EXIM), State Bank of India, Bank of Baroda, Bank of Baroda (New Zealand), Bank of India, Canara Bank, Punjab National Bank, ICICI Bank and Axis Bank.

At the same time, Fitch has affirmed IDBI Bank’s IDR while maintaining the Outlook at Negative.

“The Negative Outlook on India's sovereign rating reflects an increasing strain on the state's ability to provide extraordinary support, due to the sovereign's limited fiscal space and the significant deterioration in fiscal metrics due to challenges from the COVID-19 pandemic,” Fitch said.

The rating agency expects State Bank of India (SBI) to receive extraordinary government support, if required, due to its very high systemic importance.

SBI is the largest Indian bank with nearly 25 percent market share in system assets and deposits, it is 57.9 percent state-owned and has a much broader policy role than peers, Fitch added.

For ICICI Bank and Axis Bank, the global rating agency expects a moderate probability of extraordinary state support, due to their systemic importance, market position, and private ownership.

“The probability of extraordinary state support for the two large private banks will be lower than for large state banks, which are likely to have priority due to the sovereign's constrained finances,” it said.