S&P might lower Indian Overseas Bank

Standard & Poor's said it placed its BB+ long-term and B short-term issuer credit rating on Indian Overseas Bank (IOB) on CreditWatch with negative implications.

The agency also placed its BB+ long-term issue rating on the bank’s senior unsecured notes on CreditWatch with negative implications.

"Our rating action reflects our expectation that IOB's mounting credit losses have strained its capitalization and make it more onerous for the bank to meet the minimum regulatory capital requirement by March 2016," S&P credit analyst Amit Pandey said in a news release.

The bank’s aggressive growth over the past several years has stressed its internal control system, in the agency’s view. The Reserve Bank of India's recent advice to banks (including Indian Overseas Bank) to recognize select weak loans as nonperforming loans over the quarters ending December 2015 and March 2016, and shore up provisions for bad loans, has accentuated asset quality and capital problems for Indian Overseas Bank.

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