Punjab & Sind Bank has received a rating reaffirmation from ICRA for its Certificate of Deposits, maintaining the [ICRA]A1+ rating as of March 20, 2026. The rating action covers instruments worth Rs. 15,000.00 crore, reflecting the bank's stable financial position and strong capitalisation profile.

Rating Reaffirmation Details

ICRA's rating action dated March 20, 2026, reaffirmed the Certificate of Deposits rating at [ICRA]A1+, with no change in the rated amount from the previous assessment.

Strong Capitalisation and Financial Performance

The rating continues to factor in Punjab & Sind Bank's robust capitalisation profile, aided by the recent capital raise in March 2025. The bank's core equity capital (CET I) improved to 15.28% as on December 31, 2025, excluding interim profits, compared to 14.04% as on December 31, 2024. The overall capital adequacy ratio (CRAR) stood at 16.83% as on December 31, 2025.

Asset Quality Improvement

The bank demonstrated significant improvement in asset quality indicators during the review period. Gross non-performing advances declined to 2.60% as on December 31, 2025, from 3.83% as on December 31, 2024. Net non-performing advances reduced to 0.74% from 1.25% during the same period. The annualised fresh NPA generation rate decreased to 0.75% of standard advances in 9M FY2026 from 1.01% in FY2025.

Operational Performance and Profitability

Punjab & Sind Bank reported profit after tax of Rs. 900 crore in 9M FY2026 and Rs. 1,016 crore in FY2025. The bank's core operating profit improved to 1.05% of average total assets in 9M FY2026 from 0.90% in 9M FY2025. Return on assets stood at 0.73% (annualised) in 9M FY2026 compared to 0.66% in FY2025.

Sovereign Ownership and Support

The rating factors in Punjab & Sind Bank's sovereign ownership, with the Government of India holding 93.85% equity stake as on December 31, 2025, down from 98.25% as on December 31, 2024, following the qualified institutional placement of Rs. 1,219 crore in March 2025. The bank maintains an established presence in North India with 1,623 branches as on December 31, 2025.

Liquidity and Risk Management

The bank maintains adequate liquidity with excess statutory liquidity ratio holdings of 7-9% of total deposits during April-December 2025. The liquidity coverage ratio stood strong at 134% for Q3 FY2026 against the regulatory requirement of 100%. Net stable funding ratio was reported at 123% in Q3 FY2026, well above the regulatory minimum of 100%.

Punjab & Sind Bank has received a rating reaffirmation from Infomerics Ratings for its Basel III compliant Tier II bonds, maintaining the IVR AA/Stable outlook. The rating agency has reaffirmed its assessment of the Rs 237.30 crore bond series, highlighting the bank's continued strength from sovereign ownership and operational improvements.

Rating Details and Rationale

Infomerics Ratings has maintained its IVR AA/Stable rating for the bank's Basel III compliant Tier II Bond Series XV. The rating reflects the bank's position as a government-owned entity with continued sovereign support, adequate capitalization levels, and notable improvements in asset quality over recent years.

Key Rating Strengths

Sovereign Ownership and Support: The Government of India maintains a commanding 93.85% stake in Punjab & Sind Bank as of December 31, 2025. This majority ownership ensures continued capital and operational support, with the government demonstrating a consistent track record of strengthening public sector banks through various measures.

Adequate Capitalization Levels: The bank maintains robust capital adequacy ratios with Common Equity Tier-1 (CET-1) ratio at 15.28%, Tier-I CAR at 15.28%, and overall CAR at 16.83% as of December 31, 2025. During FY25, the bank strengthened its capital base through equity infusion of Rs 1,219 crore via QIP route and Rs 3,000 crore through infrastructure bonds.

Financial Performance Highlights

The bank has demonstrated significant improvement in its financial metrics and asset quality indicators over recent years.

Asset Quality Improvement

The bank has achieved remarkable progress in asset quality metrics, with gross non-performing assets (GNPA) ratio declining substantially to 2.60% as of December 31, 2025, from elevated levels of 13.76% in FY21. The net non-performing assets (NNPA) ratio improved to 0.74% as of December 31, 2025, compared to 0.96% in FY25.

Rating Constraints and Outlook

Despite the positive developments, the rating remains constrained by the bank's moderate resource profile, with CASA ratio at 31.02% as of December 31, 2025. The bank's relatively moderate size with total business of approximately Rs 2.50 lakh crore and geographically concentrated operations, particularly in northern India, also limit the rating.

Infomerics Ratings expects the outlook to remain stable based on continued government support, growth in advances, healthy resource profile, and further improvement in asset quality. The rating agency will monitor the bank's ability to sustain profitability improvements while containing credit costs amid asset growth.