 "IDBI Bank")
S & P Global Ratings has affirmed BB long-term and B short-term foreign currency issuer credit ratings on IDBI Bank.
It also affirmed BB programme rating on the senior unsecured notes under its medium-term notes (MTN) programme and then withdrew the ratings at the bank's request.
S & P said the outlook was negative at the time of withdrawal. "We affirmed the ratings because we expect IDBI Bank's improving financial performance to offset the risk of bank's weakening link with the government."
The Union Cabinet has approved strategic disinvestment along with the transfer of management control in IDBI Bank. "We considered this as a key transition risk for the rating over the next 12 to 18 months."
The high uncertainty associated with an eventual timeline of divestment raises further transition risk. S & P said the strategic sale in IDBI Bank will likely be challenging in the current year owing to the bank's low equity valuation and wary investor sentiment under Covid-19.
S & P said IDBI Bank's asset quality remains weaker than the industry average despite an improvement from historically very weak levels.
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