"Crisis of capital in the Indian banking system is highly over-rated. The government of India is fully behind public sector banks, whatever rating agencies may say. They can always have a right to say," Department of Financial Services Secretary D K Mittal said at Assocham event here.
"Public sector banks are fully capitalised, they shall sufficiently capitalised during this year also. So there is no cause of worry," he said.
The government has proposed to infuse Rs 15,500 crore in the public sector banks during the current fiscal to enhance their financial strength.
"We don't find any reason whatsoever that why Indian banks should be downgraded...The banks which have been downgraded, there is no reason for downgrade by rating agencies," Mittal said.
Yesterday, Fitch revised downward credit rating outlook of 12 financial agencies, including State Bank of India (SBI), ICICI bank, Punjab National Bank (PNB).
Fitch's rating action comes within days of it lowering the credit outlook of the India from stable to negative.
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The list of downgraded entities include six PSUs and two private banks. These include Bank of Baroda (BoB) and its overseas subsidiary Bank of Baroda (New Zealand), Canara Bank IDBI Bank and Axis Bank.
Others to be affected by the rating action include Export-Import Bank of India, Hudco, IDFC and Indian Railway Finance Corporation. MORE