Mumbai, May 25: State-run lender IDBI Bank today said it has formulated a turnaround strategy, which includes raising additional capital, aggressive recovery, restricting loan growth in the corporate book and the sale of non-core assets.

The plan comes at a time the lender has been hit by weak profitability and deteriorating asset quality.

Rating agency Icra has raised concerns that the high levels of losses have significantly eroded the bank's distributable reserves, which it can use to service its additional tier-I bonds.

Global rating agency Moody's today downgraded IDBI Bank's ratings to Ba2. Two other agencies - India Ratings and Icra - had recently downgraded the various debt instruments of the bank.

"We are looking at all avenues to improve our capital position and bring the bank on the recovery track," the bank's newly appointed managing director and CEO, Mahesh Kumar Jain, said in a statement today.

The lender said aggressive recovery and the prevention of further slippages have been identified as priority areas. The bank will restrict growth in the corporate loan book and focus on increasing the retail and priority sector asset base. This will help the bank to reduce risk weighted assets and improve the capital adequacy ratio in the short term.

The bank also plans to raise additional capital in the medium term. It has received a capital infusion of Rs 1,900 crore through the government's subscription to its preferential share allotment earlier this year.<>

The bank expects that its CAR would be further improved through sale of non-core assets, continued Government of India support and churning of corporate loan book.

The IDBI Bank chief added that the bank will also look at reducing its operational cost and sell non-core assets over a period of time. ``We will look at aggressive recovery and cost cutting measures and plan on churning our corporate book and risk weighted assets which should also ease the pressure on capital," he disclosed. The bank further said the focus now would be more on retail and priority sector.

With higher NPAs and negative return on assets, the Reserve Bank has recently initiated 'prompt corrective action' for IDBI bank.

For the year ended March 31, 2017, the bank posted a net loss of Rs 5,158 crore as against net loss Rs 3,665 crore in fiscal 2016. The bank's gross NPAs almost doubled to 21.25 per cent of the gross advances in the fourth quarter of the last fiscal compared to 10.98 per cent in the corresponding period of the previous financial year. The net NPAs were 13.21 per cent against 6.78 per cent.