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Company Name : Brickwork Ratings

Wednesday, October 25, 2017 6:17PM IST (12:47PM GMT)

Brickwork Ratings Places 16 Public Sector Banks on Credit Watch with Positive Implications


Bangalore, Karnataka, India

Brickwork Ratings (BWR) has placed a Credit Watch with Positive Implications for the bond ratings of 16 Public Sector Banks rated by BWR (list of banks is shared at the end of press release).
 
BWR has factored in the recent announcement of capital infusion by the Government of India (GOI) in its initiative to further strengthen the capital base of the Public Sector banks (PSBs). Brickwork Ratings views this as a credit positive step which will boost the PSBs to focus on credit growth, currently facing weak asset quality.
 
The GOI has extended its continued support to the PSBs by announcing allocation of Rs. 2.11 lakh Cr which will enable the PSBs to strengthen their balance sheet. This will help the PSBs to increase credit growth. As part of this plan, the government will issue recapitalization bonds worth Rs. 1.35 lakh Cr and infuse it as capital into PSBs. Under the Basel 3 implementation roadmap, banks need to increase total capital (including the capital conservation buffer) to 10.875 percent by March 2018 and to 11.5 percent by March 2019. The planned capital allocation will help PSBs meet the above regulatory norms.
 
Earlier in August 2015, the GOI had announced the Indradhanush – a recapitalization plan to infuse Rs.70,000 Cr into PSBs between the period FY 16 to FY19. This was to be supported by the respective PSBs raising capital on their own through equity issuances and sale of non-core assets.
 
The asset quality issues and provisioning has impacted the Bank’s Capital adequacy ratios given their limitations to raise capital. The lack of capital has prevented PSBs from growing and cleaning up their books by increasing provisions against bad loans. This has necessitated the need for GOI to increase the infusion of capital into PSBs.
 
BWR has placed the bonds of PSBs on Credit Watch with Positive Implications, given that the quantum of infusion in individual PSBs is yet to be decided. BWR will continue to monitor the landscape. Once the actual capital infusion to each of the PSBs materializes, BWR will take appropriate rating action.
 
Names of PSBs bonds rated by BWR are as follows:
Banks Rating Action on 25 October 2017
Allahabad Bank Credit Watch with Positive Implication
Andhra Bank Credit Watch with Positive Implication
Bank of India Credit Watch with Positive Implication
Bank of Baroda Credit Watch with Positive Implication
Canara Bank Credit Watch with Positive Implication
Corporation Bank Credit Watch with Positive Implication
Central Bank of India Credit Watch with Positive Implication
Oriental Bank of Commerce Credit Watch with Positive Implication
Indian Overseas Bank Credit Watch with Positive Implication
Punjab and Sind Bank Credit Watch with Positive Implication
Punjab National Bank Credit Watch with Positive Implication
State Bank of Mysore Credit Watch with Positive Implication
UCO Bank Credit Watch with Positive Implication
Union Bank of India Credit Watch with Positive Implication
United Bank of India Credit Watch with Positive Implication
Vijaya Bank Credit Watch with Positive Implication
Please click on the aforesaid respective Bank’s links for their latest rating rationale.

Hyperlink/Reference to applicable Criteria  
Analytical Contacts     Media  
Manjunatha MSR
Director – Ratings
analyst@brickworkratings.com
    media@brickworkratings.com
+91 77388 75550
             
    Relationship Contact  
       
      bd@brickworkratings.com
           
         
  Phone: 1-860-425-2742
 
For print and digital media
 
The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.
 
Note on complexity levels of the rated instrument:
 
BWR complexity levels are meant for educating investors. The BWR complexity levels are available
 
at www.brickworkratings.com/download/ComplexityLevels.pdf Investors queries can be sent to info@brickworkratings.com.

About Brickwork Ratings
 
Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, has also been accredited by RBI and empaneled by NSIC, offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled Brickwork for MFI and NGO grading. BWR is accredited by IREDA & the Ministry of New and Renewable Energy (MNRE), Government of India. Brickwork Ratings has Canara Bank, a Nationalized Bank, as its promoter and strategic partner.
 
BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations. BWR has rated debt instruments/bonds/bank loans, securitized paper of over Rs.9,30,000 Cr. In addition, BWR has rated about 5000 MSMEs. Also, Fixed Deposits and Commercial Papers etc. worth over ₹19,700 Cr have been rated. Brickwork has a major presence in rating of nearly 100 cities.
 
DISCLAIMER
 
Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.


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News Summary

Brickwork Ratings (BWR) has placed a Credit Watch with Positive Implications for the bond ratings of 16 Public Sector Banks rated by BWR.