Privatisation of two public sector banks can impact their ratings as the government support to the two entities will disappear, India Ratings and Research (Ind-Ra) said.
The rating agency said the Budget proposal to privatise the as-yet unidentified PSBs “could lead to material negative migration of the long-term issuer ratings (mapped to senior instruments such as infrastructure bonds) and the ratings on tier 2 instruments of the banks.” The impact will be more if the government chooses to privatise weaker banks.