Moody’s Investors Service, a global credit rating agency, has the local and foreign currency ratings of Indian overseas Bank and Central bank of India to Ba2 from previous ba3 ratings owing to improvement in their insolvency after the capital infusion by the government of India.
Moody’s has also upgraded their BCA ( Baseline Credit Assessment) from ‘ba3’ to ‘Ba2’.
In a statement Moody’s has graded Bank of India, Canara Bank, Oriental Bank of Commerce and Union Bank has graded their local and foreign currency to Ba3 ratings.
Along with the upgrade in the ratings, Moody’s also stated that the bank will achieve a common equity tier-1 (CET-1) of more than 8% by the end of this fiscal. As per the Basel III banking norms, the regulatory requirement is of above 7.375%, which includes minimum CET1 requirement of 5.5% and a buffer of 1.875% for capital conservation.
The upgrade in the rating of the worst rated Public sector banks (PSB) that is Central Bank of India and Indian oversees Bank comes few weeks after the government proposed a planned infusion of Rs 48,000 crore in 12 public sector banks in an effort to recapitalize.Out of this, Bank of India will get Rs 4,640 crore, Central Bank-Rs 2,560 crore, Indian Overseas Bank–Rs 3,810 crore, and Union Bank-Rs 4,110 crore.