Moody's raised its outlook on IDBI Bank Ltd. to positive from stable on expectations of the bank's improving capital position and stabilization of asset quality.
The rating agency said Feb. 27 that the positive outlook on IDBI Bank shows the upward pressure that could develop on the bank's long-term rating. This could happen if credit fundamentals continue to improve over the next 12 to 18 months due to capital infusions from the Indian government.
The positive outlook also takes into account the rating agency's view on the expected evolution of the bank's balance sheet, including a stabilization in asset quality and continued stable funding and liquidity positions.
In addition, Moody's affirmed the long-term local and foreign currency bank deposit rating of IDBI Bank at B1.
The rating agency said it could upgrade the ratings if the capital infusion helps strengthen the bank's capital to a level above minimum regulatory requirements. Conversely, a downward pressure on the bank's rating is expected if further credit losses worsen its capital position or it is noted that the government support has diminished beyond Moody's anticipation.