Oct 01, 2013, 04.39 PM IST | Source: CNBC-TV18

Moody's downgrade of sub-debt rating won't impact much: BoI

Moody's downgrade won't make borrowing money from abroad expensive, says CMD Vijayalakshmi Iyer.

Going forward I am sure there will be greater demand for credit and this would be an additional measure for the banks to tap the liquidity.

VR Iyer



Global credit rating agency Moody's has downgraded 11 Indian banks' sub-debt ratings on increased bail-in risk.

Public sector lender Bank of India , which is one of the banks picked up by Moody's, says that downgrade of sub-debt ratings will not have much impact.

Its CMD Vijayalakshmi Iyer told CNBC-TV18 that the bank has enough money to take care of credit requirements.

Bank of Baroda , Canara Bank , IDBI Bank , State Bank of India , Indian Overseas Bank , Axis Bank , HDFC Bank , ICICI Bank , Syndicate Bank and Union Bank are others which have been downgraded.

Below is the edited transcript of Vijayalakshmi Iyer’s interview with CNBC-TV18

Q: There is a downgrade of subordinate debt of 11 banks including yours by Moody’s. Will it make it expensive for you to raise money abroad?

A: I do not think because when they downgrade the rating of any particular bank it goes with the government rating. When we go to borrow or raise money abroad, specific rate parameters should not have much of an impact.

Q: You also get the advantage now to swap that money with the Reserve Bank of India (RBI) at 1 percentage point less than the market. So, should we see you using this, will you be raising money?

A: I do not think we should be doing that immediately because there is no need for us to do that. When the opportune time comes and the economy picks up then that will be a good option for me to do that.

Q: The current overseas borrowing limit has been doubled as well from 50 percent to 100 percent. How will that help you in terms of easing the liquidity pressures?

A: As the credit picks up and the economy takes a u-turn which it will definitely with the positive sentiment already built-up since yesterday. Going forward I am sure there will be greater demand for credit and this would be an additional measure for the banks to tap the liquidity.

Q: You will use it before November 30. That window is available only till November 30?

A: It is too early for me to know that because I do not need money as of now. I have money to take care of another two quarters’ credit requirement.

Bank of India stock price

On April 23, 2014, Bank Of India closed at Rs 232.40, up Rs 5.65, or 2.49 percent. The 52-week high of the share was Rs 341.80 and the 52-week low was Rs 126.95.

The company's trailing 12-month (TTM) EPS was at Rs 36.89 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 6.3. The latest book value of the company is Rs 303.77 per share. At current value, the price-to-book value of the company is 0.77.

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