PSU banks under pressure after Crisil downgrade

Oriental Bank,IDBI Bank, Allahabad Bank, Indian Overseas Bank and Andhra Bank were down more than 1% each.

Shares of select public sector undertaking (PSU) banks witnessed selling pressure after credit rating agency Crisil downgraded its ratings on the debt instruments of eight public sector banks (PSBs) on expectation that the asset quality problems being faced by PSBs will remain acute and continue through most of the next fiscal.

The resultant impact on profitability and capitalisation can further dent the credit profiles over the medium term.

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“CRISIL has downgraded its ratings on the debt instruments of eight public sector banks (the rating on one bank has been placed on “Watch negative”), and revised its outlook on five others to ‘Negative’ from ‘Stable’,” the rating agency said in a release. CLICK HERE TO READ REPORT.

Oriental Bank of Commerce, IDBI Bank, Allahabad Bank, Indian Overseas Bank and Andhra Bank were down more than 1% each. State Bank of India (SBI), Bank of India, Punjab National Bank (PNB), Canara Bank and Union Bank of India down less than 1% each, while Bank of Baroda trading flat on the NSE.

At 12:25 PM, the Nifty PSU Bank index was down 0.69% at 2,280 as compared to 0.06% rise in the Nifty 50 index. The PSU bank index hit an intra-day low of 2,262, fallen 2.5% from its early morning high of 2,319.