Ratings agency S&P's downgrade of the US was on expected lines considering events that preceded it and there is no need to panic over the development, the Indian Banks Association said today.

"I don't think immediately there is any need to panic as far as the US downgrade is concerned because primarily I think that this was a thing which was expected to happen, going by whatever we have seen in recent times," said M D Mallya, Chairman of Indian Banks Association, the head of the umbrella body of country's banks.

Mallya, also the Chairman and Managing Director of state-run Bank of Baroda, told the reporters that the downgrade was only a "validation" of the expectations of bankers.

The US administration had difficulty in getting a bill-meant to facilitate raising of country's borrowing limit and avert a possible default on debt -- passed in Senate, prior to its downgrade after market hours on Friday.

There was widespread apprehension about the impact on India after the US was downgraded to AA+ from the top-notch AAA rating by Standard and Poors (S&P). To assuage the markets, the Reserve Bank also came out with a statement before the start of trading on Monday.

The RBI said it is closely monitoring all key indicators and will continuously assess the impact of global developments on the rupee and forex liquidity, and macroeconomic stability. It added that any development will be met with a quick and appropriate response.