ICRA has reaffirmed the [ICRA] AA+ for the Rs 5 billion lower tier-II bonds of Indian Bank.The outlook on the rating is revised from Positive to Stable.

The rating agency said, ''The revision in the outlook factors in the deterioration in the asset quality in the recent past with increase in Gross Non-Performing Assets from 4.4% as in Mar. 31, 2015 to 5.6% as on Dec. 31, 2015 and its Gross NPA plus total standard restructured advances are high at around 12.6%1, which could lead to elevated fresh NPA generation rate and, could make effective recoveries more challenging over next 1-2 years.''

''The rating continues to draw comfort from the banks majority sovereign ownership, strong franchise imparting healthy and stable deposits base, comfortable liquidity profile, comfortable current capitalisation and relatively better core operating profitability, vis a vis most other public sector banks (PSBs), which provides cushion to absorb higher credit provisioning to some extent going forward,'' it added.

Shares of the company declined Rs 2.15, or 2.59%, to trade at Rs 80.90. The total volume of shares traded was 10,717 at the BSE (2.59 p.m., Wednesday).