Moneycontrol
HomeNewsBusinessMoody’s cuts long-term deposit ratings of 4 PSBs: What does it mean for the banks?
Trending Topics

Moody’s cuts long-term deposit ratings of 4 PSBs: What does it mean for the banks?

Moody’s downgraded long-term local and foreign currency deposit ratings of BoB, BoI, Canara Bank and UBI to Ba1 from Baa3 and their baseline credit assessments to b1 from ba3

September 04, 2020 / 18:45 IST
Story continues below Advertisement

It was only a few days ago when global rating agency, Moody’s downgraded the standalone credit rating of the country’s largest lender, State Bank of India (SBI), citing weak asset quality position. Following this, the agency has cut the long-term deposit rating of four government banks.

On September 4, Moody’s said  the long-term local and foreign currency deposit ratings of Bank of Baroda, Bank of India, Canara Bank and United Bank of India were downgraded to Ba1 from Baa3, and their baseline credit assessments (BCAs) to b1 from ba3. The outlook on the ratings of the four banks is negative.

Story continues below Advertisement

What is the key takeaway here?

Just like the rater cautioned during SBI’s standalone downgrade, the key concern here too is asset quality in the backdrop of the Coronavirus pandemic. More bad loans are likely to emerge and that will require more capital support for banks from the government. If that support doesn’t come on time, the health of public sector banks (PSBs) will weaken further impacting their ratings. That’s the summary of Moody’s rating action.