Differing with the downgrade accorded by Moody's, leading ratings agency Standard & Poor's has upgraded the Indian banking sector saying its domestic regulations are in line with international standards.

S&P while upgrading the risk profile a notch higher to 'Group 5 said that "In our view, banking regulations in India are in line with international standards and the regulator has a moderately successful track record.”

The latest BICRA (Banking Industry Country Risk Assessments) of S&P comes a day after US-based Moody's changed the outlook for the sector to negative from stable, a move which evoked sharp criticism from Indian government and bankers.

S&P said that the new economic risk score of 'Group 5' by S&P reflects that India has "high risk" in "economic resilience," "low risk" in "economic imbalances," and "high risk" in "credit risk in the economy.

In the 'Group 6' score on India's economic imbalance was "intermediate risk" which has now been upgraded to "low risk".

S&P, however, noted that India's economic resilience is constrained by its weak economic structure. It said that "We note that a large and persistent fiscal deficit limits the government's ability to stimulate growth through fiscal policies.”

It said the Indian banking system has level of "stable, core customer deposit", which limit dependence on external borrowing.

S&P Analyst Geeta Chugh and Deepali Seth said in the BICRA report said that "We consider governance standards as generally adequate, though disclosures are somewhat inadequate.”

(Sourced from PTI)