The private sector bank's rating has been affirmed at the earlier one of 'Baa-3/P-3', the agency said in a note.
Baa3 denotes the lowest rating in investment grade on long-term corporate obligation which carries moderate risks.
"The outlook has been revised to negative to account for the risk of further asset quality deterioration," it said in the note.
The agency noted that the bank has seen a deterioration in asset quality, particularly in the corporate segment over the last few quarters, and attributed the same to tight refinancing conditions faced by borrowers.
The refinancing conditions continue to remain tight, especially for the weaker borrowers, the agency said, adding that Indusind Bank has a high exposure of 8 per cent to the troubled realty sector.
It also said that the turbulence in the telecom sector can negatively impact the bank.
Moody's said it does not have any concern on the governance front for the bank and made it clear that its risk management framework is consistent and commensurate with its risk appetite.
An upgrade in the bank's rating is unlikely for the next 12-18 months given the negative outlook, it said, adding that the outlook can be revised back to stable if the non performing asset (NPA) ratios are maintained at the current level over the next 12-18 months.
The bank's shares gained 1.31 per cent to close at Rs 1,292.20 apiece on the BSE on Tuesday. AA BALBAL