ICRA upgrades outlook on Punjab National Bank, BoI, Oriental Bank of Commerce and Bank of Maharashtra

New Delhi: Rating agency ICRA Thursday revised upwards its outlook on four banks, including Bank of India, Punjab National Bank (PNB) and Oriental Bank of Commerce (OBC) to stable from negative.

However, the outlook of Punjab & Sind Bank was revised downwards to negative from stable.

The outlook of four banks -- Bank of India, PNB, OBC and Bank of Maharashtra -- revised to stable from negative, ICRA said in a statement.

Three of these banks -- Bank of India, OBC and Bank of Maharashtra -- recently came out from a weak-bank watch list of Reserve Bank of India (RBI).

Following infusion of capital in these banks, their financial health improved leading RBI to remove them from Prompt Corrective Action (PCA).

The government's December 2018 capital infusion into the banks -- Rs 10,100 crore into Bank of India, Rs 4,500 crore into Bank of Maharashtra and Rs 5,500 crore into OBC -- was a key driver in the banks' improvement.

ICRA upgrades outlook on Punjab National Bank, BoI, Oriental Bank of Commerce and Bank of Maharashtra

Representational image. Reuters

With regard to PNB, ICRA said, the revision in the outlook factors in the sizeable capital infusion of Rs 14,156 crore by the Government of India (GoI) in the current fiscal as a part of its recapitalisation programme for public sector banks (PSBs).

The stable outlook factors in ICRA's expectations of reduced asset quality pressure, improving solvency levels and expectations of improved earnings indicators in 2019-20, it said.

In the case of IDBI Bank, ICRA has assigned a negative outlook and removed rating watch with developing implications.

"Negative outlook, driven by the pressure on the asset quality and credit provisioning, which will remain high in 2019-20, given the elevated level of stressed assets that are yet to be provided for," it said.

The outlook will be revised to stable when the bank is able to raise capital, commensurate with its requirements, that will support the improvement of its solvency ratios, reduction of net NPAs and maintenance of the capital ratios (including CCBs), it said.

This can aid IDBI's exit from the PCA framework and restore growth and profitability.

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Updated Date: Mar 15, 2019 11:43:00 IST

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