In a wake-up call to the government to put its act together on the macroeconomic front, global rating agency Standard & Poor's (S&P) on Wednesday scaled down India's credit rating outlook from ‘stable' (BBB+) to ‘negative' (BBB-) with a warning of a downgrade if there is no improvement in the fiscal situation and political climate.

Giving reasons for downgrading India's sovereign rating outlook to the lowest investment grade and just one step away from junk bond status, S&P credit analyst Takahira Ogawa said: “The outlook revision reflects our view of at least a one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow in a weakened political setting.”

Alongside, as a reflection of the “outlook on the sovereign credit rating on India,” the S&P also lowered the rating outlook of the country's 10 top banks which include the State Bank of India (SBI), ICICI Bank and HDFC Bank.

Other banks which would also suffer collateral damage are Axis Bank, Bank of India, IDBI Bank, Indian Overseas Bank, Indian Bank, Syndicate Bank and Union Bank of India.

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