ICRA has lowered the rating of some of the bonds issued by Indian Overseas Bank due to asset quality concern.
For example Basel II compliant Lower Tier II Bonds worth Rs 2,640 crore have been lowered to AA- from A+.
The revision in the rating assigned to the bonds is due to continued deterioration in asset quality over the recent past which further impacted the profitability and solvency during 2014-15 and first quarter of 2015-16, IOB said quoting ICRA statement.
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The ratings continue to factor in the majority about 81 per cent Government of India holding in the bank. It provides a strong likelihood of sovereign support coupled with the bank's systemic importance and its established franchise in South India, it said.
Earlier this month, RBI initiated "prompt corrective action" on IOB with a view to improve internal processes to deal with mounting non-performing assets.
Gross NPAs of the bank rose to 9.40 per cent for the quarter ended June.
