S&P Global Ratings has placed its ‘BB’ long-term and ‘B’ short-term foreign currency issuer credit ratings on IDBI Bank on credit watch with negative implications.
What this means – there is uncertainty about its ability to meet its regulatory capital requirement over the next few months.
The rating agency said in its report, “The bank expects to raise capital from its majority shareholders--Life insurance Corp. of India (LIC; 51%) and the government of India (46%)--before Sept. 30, 2019, to meet the shortfall, but the quantum and timing of the capital infusion is uncertain, in our view.”
A net loss in the first quarter of fiscal 2020 (year ending March 31, 2020) due to high provisioning also led to this downgrade.
Following this, the stock price fell today and is currently among the top losers on the BSE, opening 2.4% lower at Rs.28.75 and going down to an intraday low at Rs.26.55, slumping 10%.