Rating agency Moody's Investors Service today downgraded the subordinated debt (subdebt) and junior subordinated debt ratings of 11 Indian banks.
The 11 banks affected include 8 public sector banks and three private sector banks.
Moody's has removed one to two notches of the two to three notches systemic support uplift previously incorporated in the public sector banks' subdebt and junior subdebt ratings, concluding a review started on 3 June 2013, the rating agency said in a statement.
Moody's also removed the one notch support uplift incorporated in the private sector banks' subdebt and junior subdebt ratings.
"Increasing international trend of imposing losses on holders of subdebt securities (creditor "bail-in") is a pre-condition for distressed banks to receive government support. As a consequence, Moody's assumes that Indian government support is less likely to be forthcoming for the holders of such securities," it stated.
"The global financial crisis has demonstrated that support can be provided selectively, with the costs being shared with subordinated creditors of a bank, without triggering any contagion, as it was previously feared", said Gene Fang, vice president, Moody's.