SBI slips 4 per cent on BSE after Moody's downgrade

Shares of State Bank of India took a beating on the bourses for the second consecutive session on Wednesday, losing more than 4 per cent on Wednesday after Moody's downgraded its rating of the bank's financial strength.

The stock, which settled with a loss of over 4 per cent on Tuesday, declined further by 4 per cent on Wednesday to a 52-week low of Rs 1,715 on the Bombay Stock Exchange.

Global credit ratings firm Moody's on Tuesday downgraded its guidance on SBI's financial strength by one notch to 'D+' on account of the lender's low Tier-I capital ratio and deteriorating asset quality.

As per Moody's, a 'D' rating suggest "modest intrinsic financial strength, potentially requiring some outside support at times", while a 'C' rating denotes "adequate intrinsic financial strength".

Moody's cited a likely rise in the bank's non-performing assets in the near future as one of the reasons for the downgrade.

"The government has asked us to give a report on the reasons for the downgrade," SBI Chairman Pratip Chaudhuri said in an interview.

The standalone rating for SBI's private sector peers, like ICICI Bank, HDFC Bank and Axis Bank, stands at 'C-'.

The ratings downgrade puts pressure on the government to infuse capital in the country's largest lender as soon as possible.