Credit rating agency Crisil said the ratings of Indian banks are ruling high only because of government ownership.
In a media release, Crisil said its research has led it to the conclusion that globally the ratings of banks is not more than one notch over or below the median ratings of the corporate sector.
"The quality of corporate exposures has a determining impact on the asset quality and consequently, the overall credit profile of any bank," Crisil said.
Crisil said it had studied the S&P ratings of banks and the underlying corporate sector in 30 countries.
"In 85 per cent of the countries studied, the bank's median rating was in the same rating category or within one rating category of the median rating of corporates," Crisil said.
In a majority of countries, the bank rating median was higher than the corporate rating median and mostly higher by one rating category, underscoring the fact that it is usual for bank ratings to be moderately higher than corporate ratings.
Crisil said this better position of banks is explained by the phenomenon of system support enjoyed by banks in most countries.
Crisil's study also revealed that in countries with diversified and robust economies, bank ratings benefit from the opportunity to effectively diversify risks beyond corporate exposures.
But "India is a distinct exception to this pattern," Crisil said, noting that the median Crisil rating of Indian banks is at 'AA', two rating categories above the median rating of the Indian corporate sector, which is at 'BBB'.
Crisil said this divergence is large, despite the fact that corporate advances have a relatively high share of the total advances of banks in India, logically, average bank ratings should be close to average corporate ratings.
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