Bank of Maharashtra has received rating reaffirmation from Infomerics Valuation and Rating Limited on its Basel III compliant securities worth Rs 3000.00 crore. The rating agency maintained its existing ratings on March 11, 2026, reflecting the bank's strong fundamentals and government backing.

Rating Details and Instrument Breakdown

Infomerics reaffirmed ratings across multiple Basel III compliant instruments, maintaining differentiated ratings based on instrument characteristics:

The existing Tier II bonds include instruments with ISINs INE457A08126 (Rs 348.00 crore at 8.00% coupon) and INE457A08142 (Rs 515.00 crore at 7.98% coupon). The Additional Tier I bonds comprise instruments with ISINs INE457A08100 (Rs 290.00 crore at 8.75% coupon), INE457A08118 (Rs 710.00 crore at 8.74% coupon), and INE457A08134 (Rs 880.00 crore at 8.74% coupon).

Key Rating Strengths

Sovereign Ownership and Support: The Government of India maintains a 73.60% stake in Bank of Maharashtra as of December 31, 2025, down from 79.6% following an Offer for Sale to achieve regulatory compliance for minimum public shareholding. The government's consistent track record of providing capital support and operational initiatives across public sector banks underpins the rating strength.

Adequate Capitalisation Profile: The bank maintains comfortable capital ratios with Common Equity Tier-1 ratio at 13.10%, Tier-I Capital Adequacy Ratio at 13.95%, and overall Capital Adequacy Ratio at 17.06% as of December 31, 2025. During FY25, the bank raised Rs 3,500 crore through Qualified Institutional Placement and issued Rs 1,000 crore in Tier-II bonds.

Diversified Loan Portfolio: Gross advances grew by approximately 20% year-on-year to Rs 2,73,502 crore as of December 31, 2025. The Retail, Agriculture and MSME segment constitutes approximately 63% of total advances, with the retail segment recording strong 36% growth driven by vehicle loans (54% increase) and housing loans (28% increase).

Financial Performance and Asset Quality

The bank demonstrated significant improvement in asset quality metrics:

Total deposits grew by around 15% year-on-year to Rs 3,21,661 crore as of December 31, 2025. The bank's cost of deposits remained stable at 4.58% with overall cost of funds at 4.22%.

Rating Constraints and Outlook

The ratings face constraints from the bank's relatively moderate size among public sector banks, ranking 10th among twelve PSBs with total business of Rs 5.95 lakh crore and asset size of Rs 3.93 lakh crore. Geographic concentration remains a concern with approximately 43% of the 2,719 branches located in Maharashtra and 48% concentrated in the western region.

Infomerics expects the outlook to remain stable based on continued government support, growth in advances, healthy resource profile, and comfortable capitalisation levels. The rating agency anticipates further improvement in asset quality supported by strengthened credit monitoring mechanisms over the medium term.

Bank of Maharashtra has received a positive rating action from Fitch Ratings, with the agency upgrading the bank's Viability Rating while maintaining its investment-grade status. The rating agency verified these changes on March 2, 2026, reflecting the bank's improved financial metrics and strengthened operational profile.

Rating Actions Overview

Fitch Ratings has taken several rating actions for Bank of Maharashtra, with most ratings being affirmed and key upgrades in viability assessments:

Government Support and Sovereign Linkage

The bank's Long-Term IDR and Government Support Rating are equalized with India's sovereign rating of BBB-/Stable, reflecting Fitch's assessment of high probability of extraordinary state support if needed. This assessment is based on the state's 73% ownership of the bank, Bank of Maharashtra's solid share of deposits and loans in its home state, and the government's strong propensity to support the banking system.

Improved Financial Performance

The Viability Rating upgrade to 'bb' is supported by significant improvements across multiple financial metrics. The bank's operating profit to risk-weighted asset ratio rose to 3.7% in 9MFY26 from 3.4% in FY25, exceeding Fitch's expectation of 3.3% for FY26. This improvement was driven by higher margins and lower credit costs.

Asset Quality Enhancements

Asset quality metrics have shown notable improvement:

Franchise Strength and Market Position

Bank of Maharashtra operates through approximately 2,700 branches, supporting its growth in granular loans. Retail, farm, and SME loans accounted for 62% of total loans at end-2025, contributing to above-average margins. While the bank maintains a 1.2% national market share of system loans and deposits, its franchise strength is concentrated in Maharashtra state, where per-capita income is about 1.5 times the national average.

Capital and Funding Profile

The bank maintains strong capital buffers with a Common Equity Tier 1 ratio of 15.6% in 9MFY26, including profits. Fitch expects this ratio to be sustained at around 14.5% in the near-to-medium term. The bank's loss-absorption buffer was high relative to most state bank peers, with a net impaired loan to CET1 ratio of 1.6%.

Funding and liquidity remain strengths, supported by deposit stability reflecting depositors' confidence due to state linkages. The bank maintains a liquidity coverage ratio of 116% and customer deposits represent 91% of total non-equity funding in 9MFY26.

Rating Outlook and Sensitivities

The stable outlook on the Long-Term IDR mirrors that on India's sovereign IDR. Positive rating action could occur if there is corresponding positive sovereign rating action, while negative action could result from weakened sovereign support assessment or material deterioration in the bank's risk profile. A VR upgrade is likely if Fitch revises the bank's Operating Environment score to 'bbb-', indicating lower system risks.