Central Bank of India

Ratings Reaffirmed

 

Rating Action

Rs.1000 Crore Tier I Bonds (Under Basel III)	Crisil AA-/Stable (Reaffirmed)
Corporate Credit Rating	Crisil AA/Stable (Reaffirmed)
Rs.10000 Crore Certificate of Deposits	Crisil A1+ (Reaffirmed)
Tier II Bonds (Under Basel III) Aggregating Rs.2500 Crore (Reduced from Rs.3000 Crore)	Crisil AA/Stable (Reaffirmed)

Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.

1 crore = 10 million   

Refer to annexure for Details of Instruments & Bank Facilities

 

Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AA/Stable’ rating on corporate credit rating and Tier-II bonds (under Basel III) of Central Bank of India (Central Bank). Further, Crisil Ratings has also reaffirmed its ‘Crisil AA-/Stable’ rating on the Tier-I bonds (under Basel III). The rating on the certificate of deposits programme has been reaffirmed at ‘Crisil A1+’.

 

Crisil Ratings has also withdrawn its rating on Rs 500 crore of Tier II bonds (under Basel III) on the bank's request as the outstanding against the same is nil and on receipt of confirmation from debenture trustee (See Annexure 'Details of rating withdrawn' for details). The withdrawal is in line with Crisil Ratings withdrawal policy.

 

The rating continues to factor in expectation of strong support that the bank is expected to receive from its majority stakeholder - Government of India (GoI), and the adequate resource profile of the bank. These strengths are partially offset by the moderate, albeit improving, asset quality and earnings.

 

The capital position is adequate, supported by steady internal accruals and timely equity infusion by the majority stakeholder, Government of India (GoI). Between fiscals 2018 and 2021, the government infused Rs 19,903 crore, which led to a substantial improvement in the capital adequacy ratio (CAR). Tier 1 and CAR stood at 13.9% and 16.1% respectively as on December 31, 2025 as against 14.7% and 17.0% respectively as on March 31, 2025. With continued profitability, the capital position should be adequate going forward.

 

The bank has been profitable since fiscal 2022 owing to lower credit cost backed by less incremental stress as well as improving net interest margins (NIMs) and other income. Supported by regular capital infusion, the bank was able to build a sufficient buffer for its non-performing assets (NPAs) with a provision coverage ratio (PCR)[1] of 83.8% as on December 31, 2025. With higher provisions and lower slippages, the bank is expected to maintain profitability over the medium term.

 

Asset quality metrics maintain an improving trend as gross non-performing assets (NPAs) stood at 2.7% as on December 31, 2025, as against 3.2% as on March 31, 2025, while Net NPAs improved further to 0.4% from 0.5% during the same periods owing to increase in the PCR.

[1]PCR including technical write-off was 96.7% as on December 31, 2025

Analytical Approach

For arriving at the ratings, Crisil Ratings has considered the standalone business and financial risk profiles of Central Bank and has factored in the strong support that the bank is expected to receive from its majority owner, GoI, both on an ongoing basis and in the event of distress.

Key Rating Drivers - Strengths

Expected strong support from GoI

GoI is the majority shareholder in all public sector banks (PSBs) and the guardian of India's financial sector. Stability of the banking sector is of prime importance to the government, considering its criticality to the economy, the strong public perception of sovereign backing for PSBs and adverse implications of any PSB failure, in terms of a political fallout, systemic stability and investor confidence. The majority ownership creates a moral obligation on GoI to support PSBs, including Central Bank.

 

As part of the Indradhanush framework, the government had pledged to infuse at least Rs 70,000 crore in PSBs from fiscals 2015 to 2019, of which Rs 25,000 crore per annum was infused in fiscals 2016 and 2017. In October 2017, the government outlined a recapitalisation package of Rs 2.11 lakh crore over fiscals 2018 and 2019, whereby Central Bank received Rs 5,158 crore in fiscal 2018 and Rs 6,592 crore in fiscal 2019. GoI allocated an additional Rs 70,000 crore in fiscal 2020, of which the bank received Rs 3,353 crore. In fiscal 2021, GoI infused Rs 4,800 crore. Thus, over the past few fiscals, GoI has infused Rs 19,903 crore in Central Bank, helping improve its capital ratios. As on December 31, 2025, the Tier 1 and overall CAR stood at 13.9% and 16.1%, respectively. Further, the bank had raised Rs 1,500 crore through QIP issue in March 2025.

 

Adequate resource profile

The bank operates on a large scale and has an adequate resource profile. As on December 31, 2025, it had 4,567 branches, of which around 65% are in rural and semi-urban areas. As a result, there is geographic diversity in the deposit base and an adequate proportion of low-cost current account and savings account (CASA) deposits. CASA deposits accounted for 47.0% of total deposits as on December 31, 2025 (48.7% as on March 31, 2025) and remain higher compared with peers.

 

Gross advances grew 19% y-o-y to Rs 3,23,531 crore as on December 31, 2025, while deposits grew by 13% on y-o-y basis and stood at Rs 4,50,575 crore as on same date. Cost of funds remained stable at 4.7% in the first nine months of fiscal 2026 (4.7% in fiscal 2025).

Key Rating Drivers - Weaknesses

Moderate asset quality and earnings profile, albeit improving

The bank’s asset quality remains moderate, albeit improving with GNPAs, at 3.2% as on March 31, 2025, from the earlier elevated level of 4.5% as on March 31, 2024, 8.4% as on March 31, 2023 and 14.8% as of March 31, 2022. The improvement was driven by write-offs and recoveries of Rs 3,339 crore and Rs 1,611 crore, respectively, in fiscal 2025 (Rs 10,001 crore and Rs 1,710 crore, respectively, in fiscal 2024).

 

As on December 31, 2025, GNPA improved to 2.7% due to structural improvement in asset quality seen through lower slippages (as a percentage of net opening advances) which were down to 1.0% in first nine months of fiscal 2026 from 1.4% in fiscal 2025 (2.5% in fiscal 2024; 2.4% in fiscal 2023, 3.0% in fiscal 2022 and 4.1% in fiscal 2021). Additionally, write-offs and recoveries of Rs 1,280 crore and Rs 877 crore respectively, during this period, also helped improve the GNPA ratio. NNPA improved further to 0.4% owing to increase in the PCR.

 

Given that a large part of stress in the corporate book is now recognised, slippages in this segment should be lower than in the past. However, asset quality will continue to remain a key monitorable over the medium term.

 

Earnings, while moderate, have been improving with profit reported for nineteen consecutive quarters. Return on assets (RoA) in the first nine months of fiscal 2026 increased to 1.0% (annualised) (PAT of Rs 3,644 crore) from 0.8% (PAT of Rs 3,785 crore) in fiscal 2025 on the back of controlled credit cost and other income. This is partially offset by higher operating costs. Further, provision coverage ratio remains adequate at 83.8% as on December 31, 2025 (83.3% as on March 31, 2025). Going forward, ability to sustain improvement in profitability will remain a key monitorable, with expected impact on NIMs from higher funding cost and trend in slippages determining the trajectory of credit cost.

Liquidity Superior

Liquidity is supported by sizeable retail deposits, forming a significant proportion of total deposits. Liquidity coverage ratio was 203% as on December 31, 2025, against the regulatory requirement of 100%. The bank also has access to systemic sources of funds, including the liquidity adjustment facility from the Reserve Bank of India, the call money market and refinance limits from the National Housing Bank and National Bank for Agriculture and Rural Development.

ESG Profile

Crisil Ratings believes the environment, social and governance (ESG) profile of Central Bank 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 and other sustainability related factors.

 

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

 

Key highlights:

• Central Bank of India has set a target to achieve Net Zero Scope 1 emissions by fiscal 2028 and reducing Scope 2 emissions by 50% within five years (from its fiscal 2024 baseline)
• The Bank plans to achieve carbon emission reduction goal by replacing diesel generators with energy efficient inverters, transitioning the entire vehicle fleet to electric or CNG within five years, and transitioning to renewable sources within their facilities
• In fiscal 2025, the bank demonstrated its commitment to sustainable development by disbursing Rs 2,932 crore towards renewable energy projects. Additionally, it invested ~Rs 249 crore in sovereign green bonds and climate-aligned instruments
• In fiscal year 2025, the bank reported attrition rate at around 1%, the lowest among its peers. Furthermore, the Bank's workforce comprised ~28% female employees and ~3% differently abled employees, reflecting a higher level of gender diversity and inclusivity compared to its peers
• The Bank’s loan exposure towards sectors with positive societal impact (agriculture, educational institutions, hospitals, etc) is high compared with peers and it has a strong presence in rural and semi-rural areas (36% and 30% of the Bank’s branches, respectively, as on March 31, 2025)
• The Banks’ governance structure is characterized by ~33% of its board comprising of independent directors, dedicated investor grievance redressal system, and extensive financial disclosures but nil women directors

 

There is growing importance of ESG among investors and lenders. The commitment of Central Bank 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

Crisil Ratings believes Central Bank of India will continue to benefit from government support on an ongoing basis as well as in the event of distress. The bank's ability to improve its earnings profile and asset quality will remain a key monitorable

Rating sensitivity factors

Upward factors:

• Continued improvement in asset quality and profitability, with the bank reporting return on assets of over 1.0% on a sustained basis, and
• Sustained improvement in overall market position over the medium term

 

Downward factors:

• Material change in shareholding and/or expectation of support from GoI
• Decline in CAR below minimum regulatory requirement (including capital conservation buffer, which is Tier I of 9.5% and overall CAR of 11.5%)

About the Bank

Nationalised in 1969, Central Bank was wholly owned by GoI until July 2007. After an initial public offering, the stake held by GoI came down to 89.27% as on December 31, 2025. The bank had total advances and deposits of Rs 3,23,531 crore and Rs 4,50,575 crore, respectively, and a network of 4,567 branches as on December 31, 2025.

 

For fiscal 2025, the bank reported net profit of Rs 3,785 crore on total income (net of interest expense) of Rs 19,751 crore, against Rs 2,549 crore and Rs 17,608 crore, respectively, in fiscal 2024.

 

For the first nine months of fiscal 2026, the bank reported net profit of Rs 3,644 crore on total income (net of interest expense) of Rs 15,396 crore, against Rs 2,751 crore and Rs 14,539 crore, respectively for the corresponding period in the previous fiscal.

Key Financial Indicators

As on / for the period ended		March 2025	March 2024
Total assets	Rs crore	4,79,128	4,46,673
Total income	Rs crore	39,520	35,434
PAT	Rs crore	3,785	2,549
GNPAs	%	3.2	4.5
Overall CAR	%	17.0	15.1
Return on assets	%	0.80	0.60

 

As on / for the period ended		December 2025	December 2024
Total assets	Rs crore	5,31,893	4,67,220
Total income	Rs crore	31,593	29,088
PAT	Rs crore	3,644	2,752
GNPAs	%	2.7	3.9
Overall CAR	%	16.1	16.4
Return on assets*	%	1.0	0.8

*annualised