Icra
downgrades IDBI ratings
Our Banking Bureau
16 October 2001
 Mumbai:
Credit rating agency Icra has downgraded the Industrial
Development Bank of India’s (IDBI) long- and medium-term
ratings. The long- and medium-term ratings, which were LAAA and
MAAA respectively, indicating highest safety, have been downgraded
to LAA+ and MAA+ respectively. The new ratings indicate high
safety with relatively higher standing within the category.
IDBI’s
short-term rating of A1+, which means highest safety with
relatively higher standing within the category, has been however
reaffirmed.
Icra has
pointed out that the downgrades reflect concerns over IDBI’s
asset quality and pressures on profitability. IDBI’s net
non-performing assets increased to Rs 8,371 crore as on 31 March
2001 as compared to Rs 7,675 crore as on 31 March 2000. In
percentage terms, the non-performing assets increased from 13.40
per cent in 2000 to 14.82 per cent in 2001.
While
revising the ratings, Icra said it had factored in IDBI’s
vulnerable asset quality, primarily attributable to significant
exposures in various commodity sectors like steel, te xtiles
and chemicals. Delayed economic recovery and sustained
pressure on commodity prices could impair IDBI’s asset quality
further, Icra said.
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