Bank of Baroda has received a CARE AAA; Stable rating for its ₹10,000 crore Green infrastructure bonds from CARE Ratings on February 25, 2026. The rating agency also reaffirmed existing ratings on the bank's various debt instruments, reinforcing confidence in the public sector bank's financial strength and government backing.

Rating Actions and Instrument Details

CARE Ratings assigned and reaffirmed ratings across multiple instruments totaling significant amounts:

The rating agency withdrew its rating on one Tier II bond issue due to redemption on the due date, demonstrating the bank's commitment to meeting its debt obligations.

Government Support and Franchise Strength

The ratings primarily factor in the Government of India's majority ownership of 63.97% stake as of December 31, 2025, and expected continued support given the bank's systemic importance. Bank of Baroda's established franchise spans over 11 decades of operations, making it one of the largest nationalised banks in terms of assets and business outreach.

The bank's extensive network includes 8,508 branches (84 international and 8,424 domestic), 9,316 ATMs, 1,671 cash recyclers, and over 75,000 employees as of March 31, 2025. This infrastructure serves over 140 million customers globally, providing substantial deposit mobilisation capabilities at competitive rates.

Financial Performance and Asset Quality

Bank of Baroda demonstrated strong financial performance with net profit growing to ₹19,581 crore in FY25 from ₹17,789 crore in FY24, representing approximately 10% growth. The bank's total income increased to ₹138,089 crore in FY25 compared to ₹127,101 crore in FY24.

Asset quality parameters showed significant improvement with Gross NPA ratio declining to 2.04% as of December 31, 2025, from 2.92% as of March 31, 2024. Net NPA ratio improved to 0.57% as of December 31, 2025, demonstrating effective asset quality management.

Capitalisation and Growth Prospects

The bank maintains comfortable capitalisation levels with Capital Adequacy Ratio of 17.19% as of March 31, 2025, well above the minimum regulatory requirement of 11.5%. Tier-I CAR stood at 14.79% and Common Equity Tier-I ratio at 13.78%, providing adequate cushion for future growth and potential asset quality pressures.

Advances growth remained robust at 12.83% in FY25, with the bank focusing on retail, agriculture, and MSME segments that constituted approximately 47% of global gross advances as of March 31, 2025. Total deposits grew by approximately 11% to ₹1,472,035 crore in FY25, outpacing industry growth of 10.4%.

Outlook and Key Monitoring Factors

CARE Ratings maintains a stable outlook, expecting Bank of Baroda to continue steady growth in advances and deposits while maintaining stable asset quality and comfortable capitalisation levels. However, the rating agency expects some pressure on Net Interest Margin in FY26 due to faster repricing of advances compared to deposits.

Key factors that could impact ratings include maintaining government ownership above 51%, keeping Net NPA ratio below 3% on a sustained basis, and preserving capitalisation cushion levels above 2.5% over minimum regulatory requirements.

Source: None/Company/INE028A01039/4be032ee-d088-4609-afb5-984478478f40.pdf

Bank of Baroda has received a significant credit rating boost with ICRA assigning an AAA (Stable) rating to its Long Term Green Infrastructure Bonds worth Rs. 10,000.00 crore on February 25, 2026. The rating agency also reaffirmed existing ratings across the bank's various debt instruments, reflecting the institution's strong financial position and sovereign backing.

Rating Action Summary

The comprehensive rating action covers instruments totaling Rs. 16,500.00 crore, marking a substantial increase from the previous rated amount of Rs. 6,950.00 crore. The rating agency has also withdrawn the rating for Basel III Tier II bonds worth Rs. 450.00 crore following their complete redemption.

Strong Fundamentals Drive Rating

The ratings continue to factor in Bank of Baroda's sovereign ownership, with the Government of India maintaining a 63.97% equity stake as of December 31, 2025. The bank holds the distinction of being the second largest public sector bank and fourth largest bank in the Indian financial system, commanding a market share of 6.6% in advances and 6.5% in total deposits.

Robust Capital Position

The bank demonstrates strong capitalisation with a CET I ratio of 12.45% and Tier I ratio of 13.10% as of December 31, 2025, excluding 9M FY2026 profit. The solvency level improved to 6.3% from 6.9% in March 2025, supported by high provision cover for stressed assets and steady capital accretion.

Asset Quality Improvements

The bank has demonstrated consistent improvement in asset quality metrics, with gross NPA percentage declining to 2.04% as of December 31, 2025, from 2.43% a year earlier. Net NPA percentage stood at 0.57%, reflecting effective recovery mechanisms and controlled fresh slippage generation at an annualised rate of 1.08% in 9M FY2026.

Superior Liquidity Profile

Bank of Baroda maintains superior liquidity with a daily average liquidity coverage ratio of 126.04% in Q3 FY2026, well above the regulatory requirement of 100%. The bank benefits from a competitive cost of interest-bearing funds at 4.82% in 9M FY2026 and a healthy CASA ratio of 38.45% in domestic deposits.

Outlook and Challenges

The Stable outlook reflects expectations of steady asset quality, internal capital generation, and strong liability profile. However, ICRA notes that net interest margins moderated in 9M FY2026, though they are expected to stabilise and gradually improve from Q1 FY2027. The bank's ability to control fresh slippages and maintain lower credit provisions remains crucial for sustained profitability.