Crisil upgrades ratings on 8 public sector banks

kartik

Kartik Raichura
Staff member
Crisil upgrades ratings on 8 public sector banks

MUMBAI (Reuters) - Rating agency Crisil said it upgraded its ratings on eight public sector banks on expectations of increased support from the India government.

Crisil raised its ratings on Allahabad Bank, Central Bank of India, Bank of India, Bank of Maharashtra, Dena Bank, UCO Bank Ltd, Punjab & Sind Bank, and Union Bank of India (UNIONBANK.NS : 246.8 -12.9).

The government had announced its intend to retain majority stake in public sector banks in its budget early this month, reversing its earlier plans of reducing the shareholding to 33 percent while retaining management control.

In fiscal 2009, the government infused 16.5 billion rupees of capital into three public sector banks and is expected to infuse 21.5 billion rupees more by the end of September, Crisil said in a statement.

"These measures represent a stronger and more specific articulation of GoI's intent than in the past. This articulation is a key factor in Crisil's reassessment of the expected support," said Raman Uberoi, senior director at Crisil.

"The expectation is that asset quality will deteriorate over the coming two-three years; but the capitalisation of banks in itself is robust enough to withstand this challenge," Tarun Bhatia, head of finance sector rating at Crisil, said on a conference call.

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