Mumbai: The credit rating agency ICRA, of which IFCI is a promoter, has downgraded IFCIs short-, medium- and long-term ratings.

IFCIs short-term rating has been lowered from A1(+) to A2(+), indicating high safety. The medium- and long-term ratings have been revised from MAA(-) and LAA(-) to MA(-) and LA (-) respectively, indicating adequate safety.

Earlier, in July 2001, ICRA had put IFCIs ratings on a ratings watch when IFCI faced liquidity pressures due to bunching of repayments. IFCIs liquidity is also being affected owing to the institutions high exposure in sectors like steel and textiles that are not faring well.

IFCIs net NPA levels are at 21 per cent as on 31 March 2001, which is high. Its capital adequacy as on 31 March 2001 is 6.22 per cent and is considerably lower than the required level of 9 per cent. The high NPA levels result in loss of revenue and higher provisioning, whereas low capital adequacy puts constraints in the assets growth of IFCI.

The Central government, in a revival package for IFCI, has agreed to infuse Rs 400 crore through convertible bonds, while the existing shareholders have to bring in Rs 600 crore.

Once the funds are brought in, the IFCI ratings may be reviewed.