Downgrade Unwarranted: Idbi

The Industrial Development Bank of India (IDBI) today said the revision in rating of its outstanding bond issues and Certificate of Deposit programme by Crisil from 'AAA' to 'AA+' was in total disregard of many positive factors acknowledged by the rating agency itself.

While the rationale cited by Crisil is the perceived deterioration in asset quality, non-materialisation of re-capitalisation plan and declining profitability, it has totally disregarded the many positive factors, acknowledged by the agency itself in its press release, IDBI said in a statement here.

The institution, still substantially owned by the Centre, has been enjoying sovereign-equivalent ratings from both Domestic and International Credit Rating Agencies, it said.

It said, according to the rationale of Crisil, the revision is based on perceived deterioration in asset quality, non-materialisation of re-capitalisation plan and declining profitability.

In terms of implications of rating symbols of CRISIL, 'AAA' and 'AA' come under high investment grade.

While 'AAA' denotes highest safety in terms of timely payment of interest and principal, 'AA' denotes high safety of timely payment of interest and principal. The rating of AA+ comes between 'AAA' and 'AA'.

IDBI has an impeccable record of meeting its obligations both domestically and internationally for the last 35 years.

Its capital adequacy stands improved from 14.5 per cent in 1999-2000 to 15.8 per cent in 2000-2001, while the capital adequacy ratio of other comparable institutions have come down.

The FI pointed out that unlike in the case of other institutions having substantial exposure by way of retail and short term lendings, the rating of a development financial institution like IDBI would need to be based on a long term perspective.

The rating agency however had 'reaffirmed' its ratings assigned to Fixed Deposit programme of IDBI at FAAA, and assigned the highest rating "P1+" to the term money bonds of IDBI.