Outside the ICICI Bank Towers in Mumbai, India (Photographer: Prashanth Vishwanathan/Bloomberg)

Crisil Maintains Rating On ICICI Bank’s Debt Instruments

Ratings agency Crisil today reaffirmed its rating on ICICI Bank Ltd.’s debt instruments on the expectation that it will build upon its strong market position as one of India’s best capitalised private lender.

The rating agency maintained its stable outlook on the private sector lender with a AAA rating, it said in a report. With asset quality currently under pressure due to its exposure to highly leveraged corporate groups, Crisil expects the Chanda Kochhar-led bank to remain focused on growth in the secured asset classes over the medium term.

“The bank’s healthy capital position, coupled with its demonstrated ability to raise capital and steady pre-provisioning profits cushions the bank’s credit risk profile against asset quality risks,” Crisil noted.

Unlike Fitch Ratings, which recently flagged off ICICI Bank’s loans to the Videocon Group as a “reputational risk”, Crisil said the exposure is “not material” in the context of its outstanding loan book or capital. These loans have already been classified as a non-performing asset with sizable provisioning by the bank, the rating agency said, adding that further provisioning or even write-offs pertaining to that exposure are not likely to impact the bank’s credit risk profile.

The private lender had given loans worth Rs 3,250 crore to the Videocon Group, whose chairman Venugopal Dhoot co-founded a separate company NuPower Renewables with Deepak Kocchar, the spouse of ICICI Bank’s Chief Executive Officer and Managing Director Chanda Kocchar. There was some possible quid pro quo in the grant of loans to the group, a whistleblower letter had alleged. A large part of those loans have now turned sour. ICICI Bank’s board has denied any such allegations but the Central Bureau of Investigation has launched a probe into the matter.

Crisil expects the lender’s asset quality to remain under pressure in the near term. Already, ICICI Bank's bad loans are higher than the average for its private sector peers, Crisil noted and said it may revise its outlook to ‘negative’ if earnings and asset quality deteriorate further. ICICI Bank had an asset base of Rs 8.1 lakh crore as on Dec. 31.

Meanwhile, Crisil will monitor developments to watch out for any potential materiality in outcomes on areas like management and fund raising stability, the report said.