S&P Global Ratings has reaffirmed Bank of Maharashtra 's (BoM) BBB long-term and A-2 short-term issuer credit rating with a stable outlook. This rating action underscores the bank's strong capitalization and the high likelihood of government support, despite its higher risk appetite compared to peers.

Key Highlights

• Credit Rating: BBB long-term and A-2 short-term issuer credit rating
• Outlook: Stable
• Strengths: Strong capitalization, solid deposit base, and high likelihood of government support
• Challenges: Higher risk appetite and credit losses compared to industry average

Financial Performance

Bank of Maharashtra has demonstrated robust financial performance, as evidenced by its recent financial data:

Capitalization and Risk Profile

S&P Global Ratings expects BoM's risk-adjusted capital (RAC) ratio to strengthen to 10.5%-11.0% over the next two years, up from 10% as of March 31, 2025. This improvement is anticipated despite projected loan growth of 14%-16% per annum, which is higher than the industry average.

The bank's higher risk appetite is reflected in its loan portfolio concentration and above-average credit growth. Credit losses are expected to remain at about 1.0% of customer loans over the next two years, compared to an industry average of 0.8%-0.9%.

Funding and Liquidity

BoM's funding profile remains strong, supported by:

• A stable deposit base primarily composed of granular retail deposits and public-sector deposits
• Current and savings account (CASA) deposits at 50.4% of total deposits as of September 2025
• A loans-to-deposits ratio better than peer average, indicating strong deposit mobilization capabilities

Government Support

S&P Global Ratings classifies Bank of Maharashtra as a government-related entity with a very high likelihood of extraordinary government support in the event of financial distress. This assessment is based on:

• The government's 79.6% stake in the bank as of June 30, 2025
• BoM's important role in the government's financial inclusion objectives
• The perception of government-owned banks as a unified public sector bank family

Outlook

The stable outlook reflects S&P's expectation that Bank of Maharashtra will maintain its solid capital position and continue to receive strong government support over the next two years. The bank is also expected to sustain its robust funding and liquidity, supported by high customer confidence.

While BoM faces challenges in terms of its higher risk appetite and credit losses compared to peers, its strong capitalization and government support provide a solid foundation for its operations in the Indian banking sector.

About Bank of Maharashtra

Bank of Maharashtra, established in 1935, is a public sector bank with a growing pan-India presence. As of March 2025, it held a market share of about 1.2% in loans and 1.3% in deposits in the Indian banking sector. The bank continues to focus on expanding its digital presence and calibrated branch expansion to cater to various customer segments across the country.

The Indian government is reportedly considering the privatization of Bank of Maharashtra , a public sector bank, according to recent reports from CNBC. This potential move could significantly alter the landscape of the Indian banking sector and have far-reaching implications for various stakeholders.

Potential Impact on Stakeholders

The proposed privatization, if implemented, could affect several key groups:

1. Shareholders: Current shareholders of Bank of Maharashtra may see changes in the bank's ownership structure, potentially impacting share values and future returns.

2. Employees: The bank's workforce might face organizational changes, potentially affecting job security, roles, and corporate culture.

3. Banking Sector: Privatization could reshape the competitive dynamics within the Indian banking industry, particularly among public sector banks.

Broader Implications

This consideration aligns with the government's ongoing efforts to reform the banking sector and reduce its stake in public sector banks. However, it's important to note that this information is based on reports and has not been officially confirmed by the government or Bank of Maharashtra.

Market Reaction

Investors and market analysts will likely be watching closely for any official announcements or further developments regarding this potential privatization. The news may influence market sentiment towards Bank of Maharashtra and other public sector banks in the short term.

It's crucial to emphasize that at this stage, the privatization is still under consideration. The government's final decision, the timeline for any potential privatization, and the specific details of such a move remain to be seen. Stakeholders are advised to stay informed about official communications from the government and Bank of Maharashtra for accurate and up-to-date information.