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Crisil Assigns A-plus Rating For IDBI's Rs 2,000 Crore Tier-II Bonds

The rating continues to factor in expectation of strong support from Life Insurance Corporation (LIC) and the government both on an ongoing basis and in the event of distress.

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Crisil has assigned A-plus rating with stable outlook to the Rs 2,000 crore tier two bonds under Basel III of IDBI Bank Ltd.

The ratings on the bank's other debt instruments were reaffirmed at A-plus, A-minus and A1-plus. Crisil also withdrew its rating on bonds of Rs 3,861.24 crore in line with its withdrawal policy, IDBI said in regulatory filings on Wednesday.

The rating continues to factor in expectation of strong support from Life Insurance Corporation (LIC) and the government both on an ongoing basis and in the event of distress.

The ratings also factored in the bank's established market position supported by a large asset base. These rating strengths were partially offset by weak asset quality and earnings profile.

Om January 21, LIC completed the acquisition of 51 per cent controlling stake in IDBI Bank, infusing total capital of Rs 21,624 crore. Post the acquisition, the government's stake stood at 47.11 per cent.

Given that LIC is a 100 per cent state-owned entity and has supported the government in its recapitalisation programmes for public sector banks in the past, Crisil said the government will continue to be involved in matters relating to IDBI Bank.

In September, the bank got a capital infusion of Rs 9,300 crore by LIC and the government which helped it improve capital ratios and brought it back above the regulatory requirement.

Post the capital infusion the bank has managed to correct all prompt corrective action criteria except profitability. Coming out of which will help it normalise its banking operations with approval from the Reserve Bank of India.

(ANI)


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