IDBI Bank stock up as RBI classifies it as a private lender

IDBI Bank stock up as RBI classifies it as a private lender- Trade Nivesh

NEW DELHI: IDBI BankNSE 0.58 % shares were trading with a gain of over 1 per cent in morning trade on Friday even as the Reserve bank of India classified IDBI Bank as a private lender after LIC took control of it.

Analysts say the move might lead to a rating downgrade and a rise in the cost of funding as investors would factor in the absence of sovereign backing for the bank.

Around 9:50 am, shares of the company traded 1.04 per cent up at Rs 43.55.
Meanwhile, rating agency ICRA on Thursday revised outlook of six banks including IDBI Bank, Bank of India, Punjab National BankNSE 2.07 %, Oriental Bank of Commerce, Bank of Maharashtra and Punjab & Sindh Bank.

ICRA has assigned a negative outlook to IDBI Bank and removed rating watch with developing implications.

The outlook will be revised to stable when the bank is able to raise capital, commensurate with its requirements, that will support the improvement of its solvency ratios, reduction of net NPAs and maintenance of the capital ratios (including CCBs), ICRA said.