Moody's cuts SBI rating. Another example of rating agencies slow realization

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Moody's cuts SBI rating
Moody's, the international rating agency has cut the rating of India's largest and nationalized bank, State Bank of India.

The rating agency said that it has cut the ratings as the bank has limited ability to manage its capital.

Another reason for the downgrade was on account of weakening asset quality.

It further added that the tier-I equity cannot support growth.

VIEW: The rating agency are a remarkable companies in terms of late reaction. While they are formed and are brought to give better perspective and one that is ahead of time, it has managed to achieve just the opposite.

They were late to spot the problems with the mortgage backed securities in US, that realization only came when the world was hit by recession part I.

Then these companies also got the sovereign ratings wrong of nearly all the countries.

Leave all of that, for SBI the rating agency never has much to say when the OP Bhatt wen around increasing the loan book, the rating agency showed no sign of worry in terms of asset quality.

Nor did the rating agency squeaked when in May 2011, SBI announced that it will have to clean its book with higher provisioning for assets as the RBI wants and also clear the retirement benefits.

Six months from the announcement of 'clean-up' at the SBI, the rating agency has come to this realization that the bank's rating should be decreased.

Read more about: moodys, sbi, state bank of india, bank
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