Icra Lowers Dena Bank Rating

Dena Bank has become the first listed public bank in the country to be downgraded. Icra today downgraded the rating of the bank's Rs 200 crore unsecured subordinated long term bond by four notches from LAA to LA-.

"The downgrade takes into account the impaired asset quality, high provisioning requirements. Low capital adequacy and the losses made by the bank," the rating agency said in a press release.

The bank has made a loss of Rs 266.12 crore in the last fiscal year. Its capital adequacy ratio stood at 7.73 per cent as on March 31, 2001 against the Reserve Bank of India-stipulated 9 per cent. Non-performing assets at the end of the last financial year was 18.37 per cent of the bank's total advances. The bank had to make a provision of Rs 229.94 crore for non-performing as well as standard assets.

The rating agency has also withdrawn the A1+ rating assigned to Dena Bank's Rs 500 crore certificates of deposit programme as there are no bond outstanding. The rating assigned to the Rs 100 crore long term bond (series 1) has also been withdrawn as the bank has redeemed the issue already.

Dena Bank chairman AG Joshi said: "We have stopped taking CDs and hence there will not be any impact on our borrowing." The bank is working on a three-year revival strategy. It is hopeful of cutting down the net loss by 50 per cent during the current fiscal.