The government has asked
SBI to explain the reasons behind the downgrade by
global ratings firm Moody's, the bank Chairman, Pratip Chaudhuri, said on Tuesday.
"The government has asked us to give report on reasons for the downgrade," Chaudhuri told a news channel.
Global ratings firm Moody's today downgraded its rating of SBI's financial strength by one notch to 'D+' on account of the lender's low Tier-I capital ratio and deteriorating asset quality.
"It is a downgrade of a small segment of the bank's debt," Chaudhuri said, adding SBI's overall rating is still a notch above sovereign rating.
Chaudhuri also said the State Bank of India (SBI) rights issue will restore the bank's rating.
"We will get capital from government by December or March next year," he said, adding,"...expect SBI's capital adequacy to be above 9 per cent by March 2012."
As per Moody's, a 'D' rating suggests "modest intrinsic financial strength, potentially requiring some outside support at times", while a 'C' rating denotes "adequate intrinsic financial strength".
Moody's cited a likely rise in the bank's non-performing assets in the near future as one of the reasons for the downgrade.
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