CRISIL Ratings has assigned a ‘AA+/Stable’ rating to the State Bank of India’s (SBI) proposed ₹10,000 crore Tier-I bond issuance (under Basel III).
Securities rated “AA” are considered to have a high degree of assurance with respect to the timely servicing of financial obligations. Such securities carry very low credit risk.
Given its large scale of operations, the SBI group will need to maintain adequate reserves to support growth and meet capital requirements under Basel III guidelines, the agency said.
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CRISIL Ratings believes that the Government of India will continue to support SBI’s capital requirement, considering its stature as the largest public sector bank (PSB) in India.
In addition, the Government of India held a 56.92% stake in the bank as of March 31, 2023, giving the bank flexibility to raise capital through dilution of the Government of India (GoI) stake.
The agency has reaffirmed the ‘AAA/Stable’ rating on the bank’s time deposits as well as Tier II bonds (amounting to Rs 32,524 crore under Basel III). It also reaffirmed ‘AA+/Stable’ Tier I bonds (under Basel III) adding ₹51709.7 crore.
Securities rated “AAA” are considered to have the highest degree of assurance in terms of timely compliance with financial obligations. Such securities carry the lowest credit risk.
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CRISIL said the ratings continue to take a central look at SBI group’s dominant market position in the Indian banking industry, strong resource profile and adequate capitalization.
The ratings also take into account the continued strong support the bank is likely to receive from its majority owner, GoI, both on an ongoing basis and in the event of difficulties. These strengths are partially offset by the group’s average asset quality, the agency said.
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SBI group is the largest player in the banking sector in India, with a domestic market share of 24% in deposits and 20% in advances as of March 31, 2023.
On a consolidated basis, SBI had net advances and deposits of Rs 32,67,902 crore and Rs 44,68,535 crore respectively as of March 31, 2023 (Rs 27,94,076 crore and Rs 40,87,411 crore respectively, to March 31). , 2022).
The agency noted that overall asset quality is likely to remain average over the medium term, as the bank will continue to serve clients of varying credit quality and a variety of sectors.
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