ICRA has assigned an Issuer Rating of [ICRA]AA+ (Stable) to Bank of India and reaffirmed its rating for the bank’s Basel-III compliant Tier II Bonds as [ICRA]AA+ (Stable). The reaffirmation reflects the bank’s strong capital position, sustained improvement in solvency, and its well-developed deposit franchise. Key strengths include sovereign ownership and demonstrated capital support from the Government of India.
ICRA Affirms Bank of India’s Credit Ratings
ICRA has assigned an Issuer Rating of [ICRA]AA+ (Stable) to Bank of India. Concurrently, the rating agency has reaffirmed the rating for Bank of India’s Basel-III compliant Tier II Bonds at [ICRA]AA+ (Stable). These ratings were announced on July 17, 2026.
Key Strengths Driving Ratings
The rating actions are supported by several key strengths of Bank of India. These include its strong capital position, which has been further bolstered by capital infusions from the Government of India (Gol). The bank has demonstrated a sustained improvement in its solvency levels, with Net Non-Performing Assets (NNPAs) showing a significant reduction. Furthermore, Bank of India benefits from a well-developed deposit franchise, leading to a competitive cost of funds and a granular deposit base.
Sovereign ownership, with the Gol holding 73.38% stake as of March 31, 2026, is a significant credit strength. The demonstrated track record of capital infusions by the Gol, amounting to approximately ₹29,784 crore during FY2017-FY2021, has enhanced the bank’s ability to absorb potential shocks. Bank of India’s core equity capital (CET I) and Tier I capital ratios stood at robust levels of 15.05% and 15.36% respectively, as on March 31, 2026.
Financial Performance and Outlook
The bank reported a net profit of ₹10,527 crore in FY2026 on a total asset base of ₹11.55 lakh crore, an increase from ₹9,219 crore in FY2025. While profitability has improved, it remains below peers, with a Return on Assets (ROA) of 0.96% in FY2026. ICRA anticipates that the bank’s ability to enhance yields and reduce its cost-to-income ratio will be crucial for sustained improvement in operating profitability.
The liquidity position of Bank of India is strong, with an average liquidity coverage ratio of 116.33% and a net stable funding ratio of 125.30% in Q4 FY2026, both well above the regulatory requirement. The rating outlook is Stable, reflecting the expectation that the bank will maintain its financial strength and market position.
Rating Sensitivities
Positive factors for the rating include the bank’s ability to improve its profitability while maintaining a comfortable solvency profile and healthy capitalisation. Negative factors could arise from a material deterioration in asset quality metrics, with NNPA exceeding 2.5%, or if ROA falls below 0.5% on a sustained basis. A change in sovereign ownership would also lead to a reassessment of the rating.
Instrument Details
The Issuer Rating is for Bank of India itself. The Basel III Tier II Bonds, with an amount rated at ₹2,500.00 crore, mature on December 12, 2035, with a coupon rate of 7.28%.
Source: BSE
