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Centurion
Bank rating downgraded
Our Banking Bureau
19 October 2001
Mumbai: Icra has
downgraded the Rs 300-cro re
certificate of deposit (CD) rating of Centurion Bank from A1
(highest safety) to A2 (high safety in the short-term). An Icra
communiqué said the rating downgrade takes into account the high
provisioning requirements, low capital adequacy and likely losses
that may be incurred by the bank.
The rating will continue
to be on a ‘ratings watch’ with developing implications
because of the uncertainties relating to the identification of a
strategic partner, the pricing of the share and subscription to
the preferential issue by the shareholders, said the release.
The gross and net NPAs of
the bank as on 31 March 2001 were 7.1 per cent and 3.7 per cent
respectively. However, the bank had not made provisions of Rs 29.7
crore, being the shortfall in the value of capital market
securities.
 Further,
provisions worth Rs 29.9 crore in the lease and hire purchase
portfolio, which the bank had taken over from the erstwhile
Twentieth Century Finance Company (TCFC), were not made. These
provisions will have to be made in the year 2001-2002.
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