State Bank of India (SBI) has approached rating agency Moodys Investors Services,requesting it to take a fresh look at the banks improved net worth and performance in the hope it might be upgraded. We have written to Moodys asking them to revisit our numbers now that our capital adequacy is much stronger given that we received close to Rs 8,000 crore from the government, Diwakar Gupta,managing director and CFO,SBI,said.
At the end of March 2012,SBIs tier-I capital stood at 9.79 per cent while the total capital adequacy ratio was 13.86 per cent. Last October,Moodys had downgraded SBIs bank financial strength rating (BFSR) or standalone rating to D+ from C- on lower tier-I and asset quality worries. The senior foreign currency bond rating,however,was left at Baa2. Moodys said SBIs lower tier-1 capital,at 7.6 per cent at the end of June 2011,could hamper loan growth; it also said that the capital might provide inadequate comfort in the event of rising non-performing assets.
Economists believe an upgrade for SBI might be difficult at this point,given the worsening outlook for India. On June 11,Standard and Poors warned that India risked losing its investment-grade status given slowing GDP growth and political roadblocks to economic policymaking.
Meanwhile,Indias largest lender intends to tap the US bond markets to raise $1 billion in a month,Gupta said,adding the money would be used to capitalise the banks overseas subsidiary. Given the deterioration in Indias economy,SBI will need to pay about 300 basis points more than it did three years back.