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S&P places ratings of IDBI Bank on CreditWatch

S&P Global Ratings placed the BB long-term and B-short-term foreign currency issuer ratings of India's IDBI Bank Ltd. on CreditWatch with negative implications.

The rating agency said Aug. 27 that the CreditWatch placement reflects the uncertainty regarding the bank's ability to meet its regulatory capital requirement over the next few months. The lender expects to raise capital from the Indian government and Life Insurance Corp. of India before Sept. 30.

The lender's net loss for the fiscal first quarter ended June has eroded its capital to below the regulatory minimum for a banking license. However, Ratings believes the capital breach could be temporary because the bank is in the process of raising capital from its majority shareholders.

Ratings believes the government remains committed to supporting IDBI Bank. The bank's issuer credit rating is four notches higher than its stand-alone credit profile of "b-", reflecting an extremely high likelihood of government support.

The rating agency aims to resolve the CreditWatch placement over the next three months once it has clarity on the bank's plan and timeline for shoring up its capital base.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.