Global rating agency Standard & Poor’s on Thursday said its ‘BB’ long-term and ‘B’ short-term issuer credit ratings on IDBI Bank remain on CreditWatch with negative implications due to uncertainty over the timing of funds from Life Insurance Corporation of India.

S&P had placed IDBI Bank on CreditWatch with negative implications on August 17 this year.

“The continuing placement reflects the uncertainty regarding the bank’s ability to meet its capital requirements in the near term,” the global rating agency said.

While noting that LIC’s plan to increase its stake in IDBI Bank to 51 per cent could restore its capital position, S&P pointed out that some uncertainty remains around the timing of the potential investment in the bank.

“A potential majority-stake investment by LIC remains contingent on clearance by the Competition Commission of India and a resolution of a court case by employees,” it said, adding that post the resolution of these issues, IDBI Bank would be in a position to issue shares to LIC, boosting the capital.

“We could remove the ratings from CreditWatch once there is further clarity on the timing of this deal,” S&P said, adding that it understands that the deal is in its final stages.

Public sector IDBI Bank had on Wednesday announced a further increase in its net losses to ₹3,602 crore in the second quarter of the fiscal and had said further fund infusion of ₹20,000 crore by LIC in the remaining part of the fiscal once approvals from CCI and SEBI are in place.

It has already received ₹2,098.19 crore from LIC, which has increased its holding to 14.9 per cent in the lender.

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