Global rating agency S&P on Thursday said that recent issues at private sector lenders ICICI Bank and Axis Bank highlight issues of risk management and governance.
“The recent governance issues in India's banking sector reiterate the need for banks to improve risk management and maintain strong governance processes, practices and systems,” it said in a release.
Earlier, Fitch had also raised concerns over allegations at ICICI Bank and had said it raises reputational risks.
S&P global ratings credit analyst Michael Puking said the “tone at the top” is crucial.
“Leadership groups in Indian banks need to ensure that they enhance the risk culture, reputation and financial strength of banks,” he said.
S&P further said it views the governance and transparency in Indian banking as a negative factor.