Divesting majority stake credit negative for PSBs leaning on govt: Icra

Their credit ratings have been primarily supported by their sovereign ownership and their stable deposit base, which again is a function of their ownership

The move to divest majority stake in the public sector banks (PSBs) will be negative for ratings as many of them have weak credit profile and depend on government support, according to Icra.

The rating agency said recent media reports suggest a possible divestment of majority stake in few PSBs that were left out of the consolidation exercise the Government of India (GoI) announced last year. 

The proposed divestment of majority stake by GoI will be credit negative for these PSBs. Their credit ratings are primarily supported by their sovereign ownership and their stable deposit base, which in-turn is supported