Indian Overseas Bank announced on February 27, 2026, that it has received an initial credit rating assignment from S&P Global Ratings Singapore Pte. Ltd. The international credit rating agency assigned the bank a fresh Issuer Credit Rating of BBB/Stable/A2 along with a Standalone Credit Profile of bbb-.

Rating Details and Components

The comprehensive rating assignment covers multiple parameters, all verified on February 27, 2026:

Rating Rationale and Government Support

S&P Global Ratings based the BBB rating on the expectation of extraordinary government support if needed. The long-term rating sits one notch above the bank's standalone credit profile assessment, reflecting the very high likelihood of timely and sufficient government support during financial distress. The rating agency emphasized Indian Overseas Bank's very important role as a public sector bank in promoting financial inclusion through increased access to deposit and lending services.

The bank benefits from very strong government links through majority government ownership of 92.4% as of December 2025 and control. S&P noted that the starting point for ratings on Indian Overseas Bank aligns with any bank operating predominantly in India at bbb-.

Financial Strengths and Market Position

S&P highlighted several key strengths supporting the rating assignment. The bank maintains strong capitalization with a risk-adjusted capital ratio of 10.2% as of March 31, 2025, calibrated for an economic risk score of 5. The rating agency expects Indian Overseas Bank to maintain a stable RAC ratio of 10.0%-10.5% over the next two years through steady internal capital generation and timely capital infusions.

The bank ranks among India's top 15 banks and maintains a strong presence in southern India, particularly Tamil Nadu. However, it remains a small player compared to other rated government-owned banks such as State Bank of India, Indian Bank, and Union Bank of India.

Capital Raising and Compliance Plans

Indian Overseas Bank has received board approval to raise additional INR 40 billion of capital through qualified institutional placements before end-fiscal 2026. The bank previously raised about INR 14.4 billion via such placements in March 2025. S&P expects the bank to raise additional capital over the next year to reduce government ownership to 75% from the current 92.4%, complying with the Securities and Exchange Board of India's minimum public float requirement of 25% for listed entities.

Risk Factors and Asset Quality

The rating agency identified several risk factors, including above-average loan growth and loan concentration. The bank's loan book remains concentrated in Tamil Nadu, accounting for about 36% of total loans as of December 2025. Additionally, the top 20 borrowers represent about 15% of total advances, higher than many domestic peers, though most are government-owned entities with state government guarantees.

Exposure to the agriculture sector presents another risk factor, accounting for 32% of total loans compared to the industry average of 13%. However, Indian Overseas Bank has mitigated this risk by taking gold as collateral. S&P anticipates credit losses will climb to 0.6%-0.8% of customer loans over the next two years from 0.57% in the first nine months of fiscal 2026.

Funding and Liquidity Profile

The bank demonstrates strong funding from a solid retail deposit base, benefiting from customer confidence in government ownership. Deposits consist mainly of granular retail deposits, with the top 20 depositors accounting for only 4.1% of total deposits at March 2025. Indian Overseas Bank maintained a strong stable funding ratio of about 134% on average over the past five years, higher than most domestic peers.

The bank's loan-to-deposit ratio stood at 84% as of December 2025, similar to public sector bank peers, though S&P expects this may increase to 85%-90% over the next two years as loan growth outpaces deposit growth.

Indian Overseas Bank has received fresh global credit ratings from Fitch Ratings, with the international credit rating agency assigning multiple new ratings to the public sector lender. The bank announced the rating assignment through a regulatory filing dated February 26, 2026, in compliance with SEBI listing obligations and disclosure requirements.

Rating Details and Specifications

Fitch Ratings has assigned comprehensive credit ratings across multiple parameters for Indian Overseas Bank. The rating assignment covers both short-term and long-term credit assessments along with viability and government support evaluations.

Regulatory Compliance and Disclosure

The rating assignment was disclosed pursuant to Regulation 30 read with Clause 3 of Para A of Part A of Schedule III and Regulation 55 of the Securities & Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015. The bank also referenced SEBI Master Circular No. SEBI/HO/DDHS/DDHS-POD2/P/CIR/2025/101 dated July 11, 2025, in its regulatory filing.

Verification and Timeline

All assigned ratings have been verified by the credit rating agency on the same date of assignment, February 26, 2026. The verification status confirms the authenticity and accuracy of the rating assignment process. The bank's compliance officer, Ram Mohan K, signed the disclosure document digitally, ensuring proper regulatory adherence.

Significance for Stakeholders

The fresh rating assignment by Fitch Ratings provides updated credit assessment parameters for Indian Overseas Bank across multiple categories. The BBB-/Stable long-term rating and bb viability rating offer stakeholders current insights into the bank's credit profile and financial standing as evaluated by the international rating agency.