No reason for downgrade of India's financial agencies: Mittal

A day after global rating agency Fitch downgraded to negative the credit outlook of 12 Indian financial institutions, the government today said there was no reason for such action.

"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," Financial Services Secretary DK Mittal told reporters on the sidelines of an Assocham meet.

He said financial results of all banks for 2011-12 are out and "there is nothing alarmist".

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, it lowered the credit outlook of the country from stable to negative.

The downward revision in outlook may result in increased cost of fund from overseas. The first to be affected may be the SBI which recently announced its plans to raise $2 billion from overseas market.

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.