Detailed Rationale

Crisil Ratings has assigned its ‘Crisil AA+/Stable’ rating to Rs 10,000 crore infrastructure bonds of Bank of India (BOI; Formerly konown as Bank Of India Limited) and reaffirmed its ‘Crisil AA+/Stable/Crisil A1+’ ratings on the outstanding Tier II Bonds (under BASEL III) and the certificate of deposits. Further, Crisil Ratings has also reaffirmed its ‘Crisil AA/Stable’ rating on the outstanding Tier I Bonds (under BASEL III).

 

The ratings continue to reflect the expectation of strong support from the majority stakeholder, Government of India (GoI), and the established market position and comfortable resource profile of the bank. These strengths are partially offset by moderate, albeit improving asset quality and average earnings profile.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of BOI and all its wholly-owned subsidiaries. Crisil Ratings has also factored in the strong support that the bank is expected to receive from GoI, both on an ongoing basis and in the event of distress.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths 

Expectation of strong support from the government

The ratings factor in expectation of strong government support for the bank, both on an ongoing basis, and in the event of distress. The bank has high strategic importance to GoI which is its majority shareholder, and the guardian of India's financial system as well. While the shareholding of GoI declined to ~73.38% from ~81.41% post the Rs 4,500 crore qualified institutional placement (QIP) in December 2023, it remains the majority shareholder. Stability of the banking sector is of prime importance to the government, given the criticality of the sector to the economy, the strong public perception of sovereign backing for PSBs, and severe implications of any PSB’s failure, in terms of a political fallout, systemic stability, and investor confidence. The majority ownership creates a moral obligation on the government to support PSBs, including BOI.

 

As part of the Indradhanush framework, the government had pledged to infuse at least Rs 70,000 crore in PSBs over fiscals 2015-19, of which Rs 25,000 crore each was infused in fiscals 2016 and 2017. Furthermore, in October 2017, the government outlined a recapitalisation package of Rs 2.11 lakh crore over fiscals 2018 and 2019. BOI received capital infusion of Rs 9,232 crore and Rs 14,724 crore in fiscals 2018 and 2019, respectively. The bank also received capital infusion of Rs 3,000 crore from the government in fiscal 2021.

 

Supported by the regular capital infusion made by the government and internal cash accrual, BOI’s capital adequacy ratios were adequate with Tier 1 and overall capital to risk-weighted adequacy ratio (CRAR) of 15.1% and 17.2%, respectively, at consolidated level as on September 30, 2025 (16.2% and 18.5%, respectively on March 31, 2025 and 15.6% and 17.7% respectively, as on March 31, 2024).

 

Established market position

BOI has an established market position, with gross advances of Rs 7.1 lakh crore as on September 30, 2025, which marks a growth of 14.0% on a year on year (YoY) basis (~13.7% for fiscal 2025). Total business stood at Rs ~15.6 lakhs crore as on September 30, 2025, registering growth of 11.8% on a YoY basis (growth in total business for fiscal 2025 was 12.0%). The bank has presence across the country which gives it access to a wide distribution network and retail depositors. The bank had 5,399 branches as on September 30, 2025, including 22 overseas branches. Almost 65% of branches are in rural and semi-urban areas, thereby offering access to low-cost deposits and enhancing financial penetration.

 

Comfortable resource profile

The resource profile is supported by a large deposit base and comfortable mix of low-cost deposits, driven by strong presence in rural and semi-urban areas. Domestic, low-cost current account and savings account (CASA) deposits stood at ~39.4% of total domestic deposits as on September 30, 2025 (40.3% as on March 31, 2025, 43.2% as on March 31, 2024, and 44.7% as on March 31, 2023). Share of bulk deposits (>Rs 3 crore) was around 13% of total term deposits as of September 30, 2025. This, along with the high proportion of CASA deposits, enabled the bank to maintain its cost of deposit (CoD) at a competitive level; CoD was ~4.8% in the first half of fiscal 2026 and 4.9% in full fiscal 2025. The dip in cost of deposits is on account of reduction in repo rates. Significant overseas presence (with foreign branches accounting for ~14% of total deposits as on September 30, 2025) further supports the resource profile.

Key Rating Drivers - Weaknesses 

Moderate, albeit improving asset quality

Gross non-performing assets (GNPA) stood at 3.3% as on March 31, 2025, having declined from elevated levels of 4.98% as on March 31, 2024, 7.31% as on March 31, 2023, 10.0% as on March 31, 2022 and 13.8% as on March 31, 2021. This has further improved to 2.5% as on September 30, 2025. Improvement in asset quality metric over fiscal 2025 has been driven by overall slippages remaining controlled and better recoveries in each segment.

 

Performance of agriculture and MSME book, particularly, was pivotal for the improvement in overall asset quality. Agriculture book’s GNPA improved to 8.6% as on September 30, 2025 (9.5% as on March 31, 2025, and 11.3% as on March 31, 2024) and MSME book’s GNPA improved to 6.4% as on September 30, 2025 (8.2% as on March 31, 2025, and 13.1% as on March 31, 2024). Other segments’ GNPA also demonstrated moderate improvement.

 

Slippages for fiscal 2025 were 1.3% of opening net advances as compared to 1.6% for the previous fiscal. For the second quarter of fiscal 2026, the slippages were 0.14% of opening advances and agriculture segment accounted for 50% of the slippages while corporate including overseas book, retail and MSME accounted for 7%, 9% and 35%, respectively. Nevertheless, the bank is working on various initiatives to strengthen its collections and recoveries. Ability to arrest slippages while managing collections and asset quality going forward this fiscal, is a key monitorable.

 

Average, though stabilized, earnings

Earnings, after remaining constrained by elevated credit costs over fiscals 2016-2020, have exhibited improvement thereafter. The bank has been reporting quarterly profits since first quarter of fiscal 2021, supported by a lower credit cost. Overall profitability at a consolidated level in fiscal 2025 was marked by a return on assets (RoA) of 0.9% which is higher than an RoA of 0.7% for the previous fiscal. This was supported by increased contribution of other income and controlled credit cost of 0.4% for fiscal 2025 (0.5% for previous fiscal). The pre-provisioning profit / average total assets, has remained range bound at 1.6-1.7% in the last three fiscals. During the first half of fiscal 2026, the bank reported a net profit of Rs 4,807 crore at standalone  level with an RoA of ~0.9% (annualised).

 

The bank’s provision coverage remained comfortable at 93.4% as on September 30, 2025 including technical write-offs. Ability of the bank to improve operating profits and keep the credit cost under control, will remain a key monitorable over the medium term

Liquidity Strong

Liquidity is supported by a strong retail deposit base. Liquidity coverage ratio was around ~119% for the quarter ended September 30, 2025, as against statutory minimum of 100%.

ESG Profile

Crisil Ratings believes the Environment, Social and Governance (ESG) profile of BOI supports its already strong credit risk profile.

 

The ESG profile for financial sector entities typically factors in governance as a key differentiator. The sector has a reasonable social impact because of its substantial employee and customer base and can play a key role in promoting financial inclusion. While the sector does not have a direct adverse environmental impact, the lending decisions may have a bearing on the environment.

BOI has an ongoing focus on strengthening the various aspects of its ESG profile.

 

 Key ESG highlights of BOI:

• ESG BOI’s scope 1 and 2 emissions and energy consumption intensities at ~1.9 tCO2e and ~3 MWh per employee, respectively, is broadly in line with the peer average
• The bank launched a green deposit scheme in January 2024 to raise funds for green sectors and has raised Rs. ~34 crores as of March 31, 2025.
• BOI’s attrition rate at ~1% is amongst the lowest in the sector and its gender diversity at ~29% female employees is higher compared with its peers.
• BOI’s governance structure is characterized by ~33% of its board comprising of independent directors, 1-women directors, presence of independent board chairperson, dedicated investor grievance redressal system, and extensive financial disclosures

 

There is growing importance of ESG among investors and lenders. The commitment of BOI to ESG will play a key role in enhancing stakeholder confidence, given shareholding by foreign portfolio investors and access to domestic capital markets.

Outlook Stable

The credit risk profile derives significant strength from the strong support expected from GoI both on an ongoing basis and in the event of distress. However, the bank's asset quality and profitability will remain key monitorables over the medium term.

Rating sensitivity factors

Upward factors

• Sustained improvement in asset quality and profitability with the bank reporting RoA of over 0.8% on a steady-state basis
• Considerable improvement in capitalisation metrics with significant cushion over the regulatory requirement

 

Downward factors

• Weakening of asset quality with gross NPAs rising from current levels
• Decline in capital adequacy ratios below minimum regulatory requirements (including capital conservation buffer, which is Tier I of 9.5% and overall CAR of 11.5%) for an extended period
• Material changes in shareholding and/or expectation of support from GoI

About the Bank

BOI is among the largest PSBs in India, with gross advances of ~Rs 6.7 lakhs crore as on June 30, 2025. The bank had 5,375 branches and 7,996 automated teller machines and cash recycler machines across India as on September 30, 2025. A significant number of its branches cater to rural and semi-urban areas. It has strong presence in the corporate segment, with the bulk of its business and earnings coming from large corporate clients. It also has a strong presence overseas, with around 15.3% of its total business coming from outside India. GoI’s stake in the bank was 73.4% as on September 30, 2025.

 

For fiscal 2025, at consolidated level, BOI reported net profit of Rs 9,339 crore on total income (net of interest expense) of Rs 33,818 crore as compared to Rs 6,385 crore on Rs 29,550 crore, respectively, in the previous fiscal. For the half year ended September 30, 2025, net profit was Rs 4,290 crore against total income (net of interest expense) of Rs 16567 crore, as compared to Rs 4,133 crore and Rs 16,286 crore, respectively, for the corresponding period of the previous fiscal.

Any other information:

Note on tier II instruments (under Basel III)

The distinguishing feature of Tier II capital instruments under Basel III is the existence of the point of non-viability (PONV) trigger, the occurrence of which may result in loss of principal to the investors and hence, to default on the instrument by the issuer. According to the Basel III guidelines, the PONV trigger will be determined by the RBI. Crisil Ratings believes the PONV trigger is a remote possibility in the Indian context, given the robust regulatory and supervisory framework and systemic importance of the banking sector. The inherent risk associated with the PONV feature is adequately factored into the rating on the instrument.

 

Note on non-equity Tier 1 capital instruments (Under Basel III)

The distinguishing features of non-equity Tier-I capital instruments (under Basel III) are the existence of coupon discretion at all times, high capital thresholds for likely coupon non-payment and principal write-down (on breach of a pre-specified trigger). These features increase the risk attributes of non-equity Tier-I instruments over those of Tier-II instruments under Basel III and capital instruments under Basel II. To factor in these risks, Crisil Ratings notches down the rating on these instruments from the bank’s corporate credit rating. Factors that could trigger a default event for non-equity Tier-I capital instruments (under Basel III), resulting in non-payment of coupon, include: i) the bank exercising coupon discretion, ii) inadequacy of eligible reserves to honour coupon payment if the bank reports low profit or a loss or iii) the bank breaching the minimum regulatory CET I, including CCB, ratios. Moreover, given their additional risk attributes, the rating transition for non-equity Tier-I capital instruments (under Basel III) can potentially be higher than that for Tier-II instruments