The ratings on State Bank of India's (SBI) acknowledge the bank's sound business profile, underpinned by its continued leading position in the domestic banking industry. The ratings also reflect the trend of improvement in the bank's asset quality, whereby its regulatory gross nonperforming (NPA) ratio improved to 9.4% in fiscal year 2002-2003, from 11.9% in the previous fiscal year. Despite a difficult operating environment during fiscal 2002-2003, SBI cut its gross and net NPA ratios, reflecting increased recoveries, loan growth, write-offs, and upgrades of its classified accounts. Nevertheless, with the 90-day nonperforming asset classification standard taking effect from March 2004, SBI's gross NPAs are expected to edge up. This will be mitigated, however, by the bank's accelerated loan-loss provisioning practice,
