According to SBI, they don’t see any reason to run out of capital, as they have sufficient to meet the requirements laid down by Basel III and RBI
On 24 September, 2013, State Bank of India (SBI) held a press conference meet to discuss the Moody’s rating action on SBI’s debt. On 23 September, 2013, Moody’s Investors Service downgraded State Bank of India’s (SBI) unsecured debt and rupee deposits to Baa3 from Baa2. Further Moody’s also changed SBI’s financial strength rating from stable to negative.
The rating action was primarily taken by Moody’s understanding that , due to the slowdown of the Indian economy, SBI’s standalone credit profile is facing negative pressures, which made Moody’s to change SBI’s outlook to ‘Negative’ from ‘Stable’. In a press meet, Arundhati Bhattacharya ,Managing Director and Chief Financial Officer,SBI said,"We don’t see any reason why we should run out of capital. The concerns seem to be misplaced. Our capital is more than sufficient to meet the requirements laid down by Basel III, RBI and SBI’s board. Further Bhattacharya elaborates” The government has always been supportive and have actually pumped in quite a bit of capital in the past two years, and even this year we are sure that the government will positively look at our requirements”.
Further SBI’s believes that they are the country champion and for them raising the capital is not a difficulty from the market . And therefore concerned shown by Moody’s is misplaced. Other than that SBI, stressed on the fact that, in respect of local currency bank deposit rating which has been got down by 1 notch , SBI pointed out to Moody’s, that SBI has a unparalleled deposit franchise , given the fact in the last couple of years, their market share has gone up from 16.29 to 16.73 per cent . This indicates the strength they have in the area of deposits, not only in respect of market share but also in terms of Current Account and Saving Accounts ( CASA) deposits, which is maintained between 44 per cent - 46 per cent in this entire period.
On SBI’s foreign borrowings, Hemant Contractor, Managing Director, International banking, SBI, says,” the downgrade is not going to impact SBI’s foreign currency borrowing programme, as Moody’s were the one’s, who has given us a rating which was above the sovereign. The other rating agencies like Standard and Poor’s (S&P) have maintained our rating at ‘BBB-‘, which is the rating given to the Government of India”.