Mumbai: CARE Ratings has reaffirmed the CARE AAA; Stable ratings on Bank of Baroda’s infrastructure bonds and listed outstanding Tier II bonds, citing the bank’s strong government support, established banking franchise and adequate capitalisation.
The rating action was disclosed by Bank of Baroda in a BSE filing dated October 7, 2026. CARE Ratings also reaffirmed the CARE A1+ rating on the bank’s certificates of deposit, while withdrawing the rating assigned to a fully redeemed Tier II bond.
Key Rating Actions on Bank of Baroda Instruments
The rating agency took the following actions on the bank’s various debt instruments:
- ₹10,000 crore Infrastructure Bonds: CARE AAA; Stable reaffirmed.
- ₹2,000 crore Tier II Bonds: CARE AAA; Stable reaffirmed.
- ₹500 crore Tier II Bonds: CARE AAA; Stable reaffirmed.
- ₹1,10,000 crore Certificates of Deposit: CARE A1+ reaffirmed.
- Tier II Bonds, ISIN INE077A08098: Rating withdrawn following full redemption.
CARE Ratings said the withdrawal of the final Tier II bond rating followed full repayment on the scheduled date and confirmation from the debenture trustee.
Read also: Bank of Baroda Q2 FY27 Results: Global Business Rises 17.45% to ₹32.64 Lakh Crore
Government Support and Capital Strength Support Rating
CARE Ratings said Bank of Baroda continues to benefit from the majority ownership of the Government of India and its systemic importance in the Indian banking sector.
As of June 30, 2026, the Government of India held a 63.97% stake in Bank of Baroda. The agency expects the bank to receive government support, if required, given its strategic importance and government ownership.
Other factors supporting the ratings include:
- An established banking franchise across India.
- A wide branch network.
- International banking operations.
- Strong capitalisation.
- Stable growth in advances and deposits.
- Controlled asset quality.
As of June 30, 2026, Bank of Baroda reported a capital adequacy ratio of 16.30% and a CET1 ratio of 13.90%. CARE expects the bank to maintain a sufficient capital cushion above regulatory requirements over the medium term.
The Stable outlook reflects expectations of steady credit and deposit growth, controlled asset quality and adequate capitalisation.
Bank of Baroda Profit Rises in FY26, But Net Interest Margin Declines
Bank of Baroda reported a net profit of ₹20,021 crore in FY26, compared with ₹19,581 crore in FY25.
However, the bank’s net interest margin (NIM) declined during the period:
- FY25 NIM: 2.78%
- FY26 NIM: 2.53%
CARE Ratings has factored the bank’s earnings performance and profitability trends into its overall assessment.
NMC Settlement Provision May Weigh on FY27 Profitability
A key concern highlighted by CARE Ratings is the impact of a one-time provision related to the settlement involving NMC Group companies.
Bank of Baroda made a provision of ₹5,680 crore in Q1FY27 towards an out-of-court settlement with the joint administrators of companies associated with the NMC Group.
The agreed settlement amount was paid on July 1, 2026. The settlement was reached without admission of liability or wrongdoing by the bank.
The provision significantly affected the bank’s profitability in the first quarter of FY27.
Bank of Baroda reported:
- Q1FY27 net profit: ₹1,278 crore
- Q1FY26 net profit: ₹4,541 crore
CARE Ratings expects profitability to remain relatively subdued in FY27, primarily because of the impact of this one-time provision.
Asset Quality Remains a Key Rating Monitor
Bank of Baroda’s asset quality remained under close monitoring, although its reported bad loan ratios were contained as of June 30, 2026.
- Gross NPA: 1.99%
- Net NPA: 0.50%
CARE Ratings said the bank’s ability to keep fresh slippages and new bad loans under control will remain an important factor for its credit profile.
The agency has identified sustained deterioration in asset quality as a potential negative rating factor. A net NPA ratio consistently above 3% or return on assets below 0.50% could put pressure on the bank’s ratings.
Overall, CARE Ratings continues to view Bank of Baroda’s government ownership, systemic importance, established franchise and strong capital position as key strengths supporting its CARE AAA; Stable rating.
About Bank of Baroda
Bank of Baroda (BoB) is a major Indian public sector bank with a large domestic branch network and an international presence. The bank offers a wide range of banking and financial services, including retail banking, corporate banking, loans, deposits, digital banking and international banking services. Its majority government ownership and significant presence in the Indian banking sector are important factors supporting its credit profile.
Read also: Union Bank of India Retains CARE AAA / Stable Rating on Tier-2 and Infrastructure Bonds
