Mumbai, March 18 -- State-owned Bank of India is looking to go beyond its comfort zone of lending to companies with the highest credit ratings to shore up its margins, which is already under pressure and could sink further following the Reserve Bank's rate cut.

Chief executive Rajneesh Karnatak said in an interview withMint that the bank is looking for companies rated 'BBB' or 'A' to lend to, as those rated 'AA' or above have more bargaining power on lending rates.

Credit ratings offer insights into a borrower's financial strength, with a high rating signifying a lower possibility of default than low-rated counterparts. Banks charge a spread on top of the benchmark lending rate to arrive at a final rate, and better-rated companies or th...