Moody's downgraded Indiabulls Housing Finance Ltd.'s long-term corporate family rating to Ba2 from Ba1.

The rating agency said Aug. 14 that it also downgraded the company's foreign-currency senior secured rating to Ba2 from Ba1. Moody's lowered the outlook on the company's ratings to negative from stable.

The downgrade reflects renewed pressure on the cost and availability of funds for Indiabulls Housing Finance and certain other finance companies in India, Moody's said. It added that the downgrade also takes into account deterioration in the company's asset quality in the quarter ended June 30.

The lowered outlook on Indiabulls Housing Finance's ratings reflects the possibility that the tight funding conditions may persist for some time, which could further pressure other aspects of the finance company, such as profitability and asset quality, the rating agency said.

Moody's noted that if Indiabulls Housing Finance's planned merger with Lakshmi Vilas Bank Ltd. is approved by the Reserve Bank of India and consummated, it would be a significant credit positive event for the finance company.