The bank's gross NPA ratio declined to 24.7 per cent from the high of 25 per cent in the quarter ended September 2017.

Mumbai: Moody's Investors Service today affirmed the long-term local and foreign currency bank deposit rating of IDBI Bank at B1 and changed the outlook to positive from stable.

The rating agency also affirmed the state-run lender and its DIFC branch's long-term foreign currency senior unsecured debt rating at B1 and changed the outlook to positive.

"The positive outlook reflects the upward pressure that could develop on the bank's long-term rating, if its credit fundamentals -- such as capital position -- continues to improve over the next 12-18 months due to capital infusion," the rating agency said in a note.

The positive outlook also factors in the rating agnecy's view on the expected evolution of the bank's balance sheet, including a stabilization in asset quality and continued stable funding and liquidity positions.

Under the recapitalisation plan, the bank will get Rs 7,881 crore in new capital by March.

The rating agency said this capital infusion will increase the common equity tier 1 (CET1) ratio for the bank to about 9.8 per cent based on the risk weighted assets as of December 2017.

The bank will continue to report losses over the next few quarters on account of high provisioning charges, eroding this capital level.

The rating agency expects that the CET1 ratio as of March 2019 will meet the minimum Basel III capital needs.

The bank's gross NPA ratio declined to 24.7 per cent from the high of 25 per cent in the quarter ended September 2017, while net NPA ratio stabilized at 14.3 per cent compared again with the previous quarter.

The rating agency said the bank's ratings could be upgraded in the next 12-18 months, if the capital infusion helps strengthen the bank's capital to a level above minimum regulatory requirements under Basel III standards, and/or the bank returns to profitability on a sustainable basis.

The IDBI counter plunged 6.8 per cent to Rs 73.55 on the BSE on Tuesday against a 0.29 per cent correction in the benchmark Sensex bringing down its market capitalisation Rs 19,435.6 crore.