The Rating Agency Fitch, came out with a warning on ICICI Bank’s fall in individual and support ratings for the first time. The Agency retained a BBB-grade on ICICI Bank’s long-term foreign currency Issuer Default Rating (IDR). The country’s second-largest lender’s individual rating and support ratings were affirmed at ‘C’ and ‘2’, respectively, and both these ratings are currently facing downward pressure.

The agency, in a release has said that the bank’s individual ratings may be downgraded if its asset quality, which is already showing signs of weaknesses, deteriorates significantly more than anticipated at this current juncture. This may put further pressure on the bank’s funding, particularly for its growing international business, where market borrowings have a relatively large share, and refinancing risk has already increased steeply, possibly leading to a liquidity problem.

Fitch pointed: “In line with a gradually deteriorating macro-economy, but due more to its own aggression in certain consumer business segments, ICICI’s asset quality has been deteriorating over the past year or so, particularly in the consumer loan portfolio that had grown rapidly between FY04 and FY08. Its gross NPL ratio at 4% at end-September 2008 was the highest amongst its peer-rated banks in India”

ICICI Bank officials, however, said that the Fitch ratings were unsolicited and the bank did not share any data with the agency. The bank has sufficient liquidity and it has repaid $300 million in the past few weeks. Also, it has neither used RBI line nor Rupee funds to fund its international books.