Rating Action: Moody's affirms Export-Import Bank of India's Baa3 ratings; upgrades BCA to ba2Global Credit Research - 01 Sep 2022Singapore, September 01, 2022 -- Moody's Investors Service has affirmed Export-Import Bank of India (EXIM India)'s Baa3 long-term foreign currency deposit, issuer, and senior unsecured debt ratings. At the same time, Moody's has upgraded the bank's baseline credit assessment (BCA) and adjusted BCA to ba2 from ba3, reflecting improvements in its standalone credit strength, in particular capital.The outlook on ratings for EXIM India, where applicable, remains stable.The full list of affected ratings is at the end of this press release.RATINGS RATIONALEThe upgrade of EXIM India's BCA is driven by material improvements in asset quality and capital, as well as Moody's expectations that profitability will increase over the next 12 – 18 months as the burden of high credit costs wanes.Gross non-performing loan (NPL) ratio declined to 3.56% as of the end of March 2022 from 8.75% as of the end of March 2020 because of recoveries, upgrades and write-offs. The bank continues to maintain high level of provisions against the declining stock of gross NPLs with net NPL ratio of 0% as of 31 March 2022 and provision coverage ratio of 100%, high compared to other rated Indian banks.Capital also improved following multiple rounds of capital injection from the Indian government over the past few years. As of 31 March 2022, EXIM India reported a Capital Adequacy Ratio of 30.49% and a Tier 1 capital ratio of 28.58%, higher than the 20.13% and 18.70%, respectively, as of 31 March 2020.Return on assets rose to 0.5% for the year ended March 2022 from 0.2% in the year earlier period, because credit costs declined in line with improvements in asset quality.The bank's final Baa3 rating incorporates a two-notch uplift due to Moody's assumption of very strong support from the Indian government (Baa3 stable).The assumption is based on EXIM India's strong relationship with the government, including its establishment under a law that designates its quasi-sovereign status, the government's full ownership of the bank, and the bank's clear policy role as an export credit agency.The government has been infusing capital into the bank every year for the past five years. Further, the bank supports the government's foreign policy goals by extending government guaranteed bilateral loans. The government compensates the bank for any differential in pricing that is incurred in conducting such mandate. Moody's does not expect such government support to change.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSFACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGSAn upgrade of EXIM India's long-term ratings is unlikely because they are at the same level as the sovereign rating. However, the BCA could be upgraded if asset quality improves, specifically corporate loans that do not benefit from government guarantee.FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGSEXIM India's long-term ratings could be downgraded if India's sovereign rating is downgraded. The BCA could be downgraded if there is a significant increase in NPL ratio, coupled with a material decline in profitability and capital.The principal methodology used in these ratings was Banks Methodology published in July 2021 and available at https://ratings.moodys.com/api/rmc-documents/71997. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.EXIM India, headquartered in Mumbai, reported total assets of INR1.4 trillion as of 31 March 2022.Upgrades:..Issuer: Export-Import Bank of India.... Adjusted Baseline Credit Assessment, Upgraded to ba2 from ba3.... Baseline Credit Assessment, Upgraded to ba2 from ba3Affirmations:..Issuer: Export-Import Bank of India.... Long-term Foreign Currency Issuer Rating, Affirmed Baa3, Outlook Remains Stable.... Long-term Foreign Currency Senior Unsecured Medium-Term Note Program, Affirmed (P)Baa3.... Long-term Foreign Currency Senior Unsecured Regular Bond/Debenture, Affirmed Baa3, Outlook Remains Stable.... Long-term Foreign Currency Deposit Rating, Affirmed Baa3, Outlook Remains Stable.... Short-term Foreign Currency Deposit Rating, Affirmed P-3..Issuer: Export-Import Bank of India, London Branch.... Long-term Foreign Currency Senior Unsecured Medium-Term Note Program, Affirmed (P)Baa3.... Long-term Foreign Currency Senior Unsecured Regular Bond/Debenture, Affirmed Baa3, Outlook Remains StableOutlook Actions:..Issuer: Export-Import Bank of India....Outlook, Remains Stable..Issuer: Export-Import Bank of India, London Branch....Outlook, Remains StableREGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating. Rebecca Tan VP - Senior Analyst/CSR Financial Institutions Group Moody's Investors Service Singapore Pte. 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