India Ratings Assigns Small Industries Development Bank of India's CP 'IND A1+'

India Ratings and Research (Ind-Ra) has rated Small Industries Development Bank of India's (SIDBI) commercial paper (CP) as follows:

Instrument Type Date of Issuance Coupon Rate Maturity Date Size of Issue (million) Rating Rating ActionCP - - 7 days to 365 days INR216,000 IND A1+ Assigned

KEY RATING DRIVERS

Apex Policy Agency for MSME Sector: SIDBI was established in 1990 under the Act of Parliament as the apex financial institution for the promotion, financing and development of micro, small and medium enterprises (MSME) sector. In its role, SIDBI extends refinance to primary lending institutions such as banks (including foreign banks), financial institutions, state finance corporations (SFCs), state industrial development corporations and state small industries development corporations against their MSME loan portfolio. SIDBI also extends financial assistance to micro finance institutions in the form of loans, equity/quasi-equity for on-lending to the economically weaker section of society. It also extends direct assistance such as long-term loans, working capital facilities and discounting/rediscounting bills of exchange to the MSME sector.

RATING SENSITIVITIES

Negative: A dilution in SIDBI's public policy institution role of financing and development of the MSME sector, resulting in reduced GoI linkages could be negative for the rating.

COMPANY PROFILE

SIDBI is established under the Act of Parliament- SIDBI Act, 1989. It acts as the principal financial institution for the promotion, financing and development of the MSME sector and for coordination of the functions of the institutions engaged in similar activities. SIDBI has three wholly owned subsidiaries namely SIDBI Venture Capital Ltd, SIDBI Trustee Co. Ltd and MUDRA.
Parameters FY17 FY16Interest earned (INR million) 65,084.9 58,790.8Interest expended (INR million) 43,864.7 37,453.9Profit before tax (INR million) 18,630.0 17,481.7Profit after tax (INR million) 12,279.9 12,466.0Capital adequacy ratio (%) 30.77 30.71Gross NPA (closing) (INR million) 8,232.8 10,081.8Net NPA to net advances (%) 0.44 0.73Source: SIDBI

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