Fitch Ratings has affirmed Bank of Maharashtra’s (BOM) Long-Term Issuer Default Rating (IDR) at ‘BBB-‘ with a Stable Outlook. Concurrently, Fitch upgraded the bank’s Viability Rating (VR) to ‘bb’ from ‘bb-‘, reflecting improvements in risk profile and financial performance. The Government Support Rating (GSR) was affirmed at ‘bbb-‘, maintaining the linkage to India’s sovereign rating.
Fitch Ratings Actions Summary
Fitch Ratings announced on 02 March 2026 that it has taken decisive action on the ratings for the Bank of Maharashtra (BOM). The primary Long-Term Issuer Default Rating (IDR) has been affirmed at ‘BBB-‘ with a Stable Outlook. The Short-Term IDR was affirmed at ‘F3’.
The key change was the upgrade of the bank’s Viability Rating (VR) to ‘bb’, moving up from the previous ‘bb-‘. The Government Support Rating (GSR) remains affirmed at ‘bbb-‘. Furthermore, the Long-Term Issuer Default Rating excluding government support (LT IDR (xgs)) was upgraded to ‘BB(xgs)’ from ‘BB-(xgs)’.
Key Rating Drivers
Government Support-Driven IDR
The Long-Term IDR and GSR are equalized with India’s sovereign rating of ‘BBB-/Stable’. This reflects Fitch’s assessment of a high probability of extraordinary state support, driven by the state’s 73% ownership in BOM and the strong propensity of the government to support the wider banking system.
VR Upgrade Rationale
The upgrade of the Viability Rating to ‘bb’ is attributed to demonstrable improvements in the bank’s risk profile and sustained financial performance. Fitch’s positive outlook on the Operating Environment (OE) further supports this, reflecting expectations of reduced sector risks due to enhanced supervision by the central bank. The OE score of ‘bb+’ is adjusted positively due to the size and structure of the economy and economic performance.
Strengthened Risk Profile and Asset Quality
The risk profile score was revised to ‘bb-‘ from ‘b+’, driven by improved underwriting standards, better loan diversification, and reduced corporate loan risk. Asset quality saw its outlook revised to positive, as the impaired-loan ratio fell to 1.6% in the nine months ended March 2026 (9MFY26), down from 1.7% in FY25. Credit costs also decreased to approximately 1% in 9MFY26.
Profitability and Capital Buffers
Earnings and profitability score was revised to ‘bb’, supported by an operating profit/risk-weighted asset (OP/RWA) ratio that rose to 3.7% in 9MFY26 (up from 3.4% in FY25). Capitalization remains strong, with the Common Equity Tier 1 (CET1) ratio expected to be sustained around 14.5% in the near-to-medium term.
Franchise Strength
BOM’s franchise, built on approximately 2,700 branches, is heavily concentrated in the state of Maharashtra, where per-capita income is significantly higher than the national average. Granular loans, including retail, farm, and SME segments, constituted 62% of total loans at the end of 2025.
Rating Sensitivities
Potential for Downgrade
The Long-Term IDR and GSR could face downgrade pressure if support from the sovereign weakens, or if India’s sovereign rating is negatively reviewed. The VR could be downgraded if BOM’s risk profile materially deteriorates, constraining its financial buffers.
Potential for Upgrade
A positive rating action on the Long-Term IDR would likely correspond to a positive sovereign rating action. A VR upgrade is possible if Fitch revises the bank’s OE score upwards to ‘bbb-‘, provided the bank maintains its current strong financial performance and risk metrics.
Source: BSE
