Mumbai: The credit
rating agency ICRA, of which IFCI is a promoter, has downgraded
IFCIs short-, medium- and long-term ratings.
IFCIs short-term
rating has been lowered from A1(+)
to A2(+), indicating high safety. The medium- and long-term
ratings have been revised from MAA(-) and LAA(-) to MA(-) and LA
(-) respectively, indicating adequate safety.
Earlier, in July 2001,
ICRA had put IFCIs ratings on a ratings watch when IFCI faced
liquidity pressures due to bunching of repayments. IFCIs
liquidity is also being affected owing to the institutions high
exposure in sectors like steel and textiles that are not faring
well.
IFCIs net NPA levels
are at 21 per cent as on 31 March 2001, which is high. Its capital
adequacy as on 31 March 2001 is 6.22 per cent and is considerably
lower than the required level of 9 per cent. The high NPA levels
result in loss of revenue and higher provisioning, whereas low
capital adequacy puts constraints in the assets growth of IFCI.
The Central government,
in a revival package for IFCI,
has agreed to infuse Rs 400 crore through convertible bonds, while
the existing shareholders have to bring in Rs 600 crore.
Once the funds are
brought in, the IFCI ratings may be reviewed.
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