Mumbai: Credit rating agencies are reviewing the ratings of public sector Punjab National Bank (PNB) for a possible downgrade in light of Rs 11,300 crore fraud on the bank which came to light on Wednesday .
“This is a material event according to the SEBI guidelines for rating agencies and a revised rating must be out in the next seven days. We are evaluating the situation and sought some clarifications from the bank. We will put out a revised rating in the next few days,” said Mitul Budhbhatti, associate director at Care Ratings. Care has a AA+ rating on the bank. The last rating revision was done in October 2017 according to the rating company’s website.
Crisil was the latest to revise the bank’s rating when it revised the outlook on 18 public sector banks including PNB to stable from negative on January 25 citing support from the government’s recapitalisation. Crisil has a AAA rating on the bank.
Rating agencies are still trying to gauge the exact impact in what is based on current available information, the largest banking fraud in the country. Each rating agency will try to reach out to PNB to clarify the bank’s liabilities and impact on provisions which could dent the bank’s profits and erode an already depleted capital base.
“We are trying to ascertain the exact impact. How much the government will provide support and in what time frame will be crucial because it will help us figure out what is the dent on PNB. We will also have to analyse the systems of the bank which could not prevent such a fraud from happening,” said a senior rating official.
India Ratings and ICRA the two other ratings companies have a AAA and a AA+ rating on PNB. Bother these ratings were last revised in July and June respectively. All rating agencies are likely to release a revised rating by the middle of next week.
Source: Economic Times