TOKYO. Sept 8: Rating agency Standard and Poor's Asia Ltd IS and P) said today it had affirmed Ils "B" rating for short-term foreign currency debt issued by the State Bank of India (SBI). the country's largest bank, reports AFP.

The rating reflects the majority ownership of the bank by the Reserve Bank of India and Its dominant market position In all areas of the Indian banking sector.” the New Yorkbased rating agency said.

S and P added that it also reflected the BB-plus rating on India s long-term sovereign debt

Tlie agency note^l that the Indian central bank had recently cut Its stake to 66.3 |xr cent and that ownership can be further diluted to 55 per cent.

”S and P adopts the view that, given SBI's size .and position"’as the largest’bank in India, the government of India would act to support SBI >n Hj< future should the need arise.” it said.

But the. agency also noted that asset quality compared unfavourably with other international banks, although com-' parisoris are difficult because of exposures to priority sectors under Reserve Bank requirements.

Non-performing loans net of provisions amounted to 17.5 per cent of advances at the end of March. But given the liberal definition of non-per forming loans, they are believed to be even higher based on international standards.

The agency said loan loss . provisions seemed to be "Mtlsfu< toiy at the end ol Mim h However, wither adequacy is uncertain given the perception that the real level of non-performing loans may be higher.

The adequacy of provisjon; also needs to be considered against the difficulty in India ol the ability to foreclose on loan Security." it.said.