"Although the bank has made provisions for its impaired loans in accordance with domestic regulatory requirements and has also begun to make general provisions, asset quality is expected to remain one of the key sensitives in SBI's rating," S&P said.

S&P said that though the published asset quality measures of the bank have improved and are comparable to its domestic peers, SBI's non-performing assets-to-total loans ratio of 14 per cent is still high by international standards.

While on the basis of its published equity-to-assets ratio, SBI's 5.35 per cent capitalisation is average by international standards, it is likely to be leveraged in the medium term as thebank expands into infrastructure financing and investment banking activities. "SBI's risk-adjusted capital ratio is adequate at 14.58 per cent, although calculations are not strictly according to Bank of International Settlements (BIS) standards," according to S&P.