The State Mortgage and Investment Bank, a specialist housing bank with assets of 9.
1 billion rupees was recently downgraded by Fitch Ratings by one notch to A (Sri) in January 2006, because its stagnating loan portfolio was losing market share.
The bank also suffers from non-performing loans partly because some borrowers who borrow against their superannuation fund, deliberately default, using the bank as a means to prematurely withdrawing pension funds.
The 222 billion rupee National Savings Bank, which has about 80 percent of its assets invested in government securities, is rated AAA (sri) by Fitch.
Only about 5 percent of NSB loans are in the housing sector, but recoveries are high," says Gerard Wickrema, an analyst at Fitch.
On the other hand SMIB needs to improve its monitoring of small loans and recoveries, Fitch says.
The proposal to merge the two banks was initiated on a presidential directive, an official of the Strategic Enterprises Management Agency (SEMA) whi