CRISIL has assigned its 'AAA/Stable' rating to the Rs.15-billion Tier-II bond issue (under Basel III) of Punjab National Bank (PNB) and has reaffirmed its rating on the bank's existing debt instruments at 'AAA/Stable'.

The rating continues to factor in the expectation of strong support that PNB is likely to receive from its majority owner, the Government of India (GoI). The rating also reflects PNB's strong market position, comfortable capitalisation, healthy resource profile, and above-average earnings profile. These rating strengths are partially offset by PNB's modest asset quality.

CRISIL believes that PNB will continue to benefit from strong GoI support. PNB is likely to maintain its comfortable capitalisation and strong market position over the medium term. The outlook may be revised to 'Negative' if there is steep and sustained deterioration in its asset quality or earnings profile.

Shares of the bank declined Rs 7.85, or 0.8%, to settle at Rs 967.40. The total volume of shares traded was 128,410 at the BSE (Tuesday).