Credit Analysis & Research (CARE) has downgraded the lower Tier II bonds rating of Central Bank of India (CBI) from 'AA' to 'AA-' aggregating to Rs 14.37 billion. CARE has also downgraded the upper Tier II bonds rating from 'AA-' to 'A+' aggregating to Rs 22.85 billion of the bank.

CARE has reaffirmed (on notice of withdrawal) the certificate of deposit programme rating to 'A1+' aggregating to Rs 300 billion of bank.

CARE has rated the aforesaid Upper Tier II Bonds after taking into consideration their increased sensitiveness to Central Bank of India's Capital Adequacy Ratio (CAR), capital raising ability and profitability during the long tenure of the instruments.

The rating factors in the additional risk arising due to the existence of the lock-in clause in the hybrid instruments.

Any delay in payment of interest/principal (as the case may be) following invocation of the lock-in-clause, would constitute as an event of default as per CARE's definition of default and as such these instruments may exhibit a somewhat sharper migration of the rating compared to the conventional subordinated debt instruments.

Shares of the bank declined Rs 0.5, or 0.96%, to settle at Rs 51.55. The total volume of shares traded was 285,728 at the BSE (Thursday).