IDBI Bank Ltd

IDBI Bank Ltd – Closure of trading window

Instruments rated

• Fixed deposits: IND AA/Stable affirmed.
• Certificate of deposit: IND A1+ affirmed (Up to 365 days).
• Senior debt: rating withdrawn.
• Omni Infrastructure bonds: rating withdrawn.
• Basel III Tier II bonds: rating withdrawn.

Rationale and key drivers

• Comfortable capital position with CET1 26.38% in 1QFY27.
• Stable CASA and retail-focused franchise supporting funding and earnings.
• Asset quality improving; gross NPAs 2.30% in 1QFY27.
• Profitability improved; NIM ~3.6% and lower credit costs.
• GoI/LIC divestment plan monitored as rating monitorable.

Liquidity and sensitivities

• Liquidity adequate; LCR 120.87% in 1QFY27.
• Positive sensitivities: franchise growth, profitability, and higher capital buffers.
• Negative sensitivities: CET1 sustained below 12%, rising NPAs, or funding erosion.

Outlook and changes

• Outlook: Stable for fixed deposits; COD outlook not specified.
• Divestment plan by GoI/LIC remains rating monitorable.

Disinvestment clarification

• Strategic disinvestment is being conducted through competitive bidding under GOI guidelines.
• IDBI Bank has had no role in the IIFL Finance matter.
• Bank is not aware of information behind trading movements and will disclose material information promptly.
• No regulatory or legal proceedings related to the referenced news report at bank level.
• Bank has consistently disclosed price-sensitive information to exchanges as required by SEBI LODR.

Change in Senior Management Personnel

• Shri Sunit Sarkar ceases to be Executive Director due to superannuation, effective Aug 31, 2026.

Rating Action

• ICRA reaffirmed IDBI Bank's long-term ratings at AA (Stable) and short-term at A1+.
• Certain bonds were fully redeemed and withdrawn (infrastructure ₹1,000 crore; Basel III Tier II ₹1,900 crore).

Instruments Rated

• Infrastructure bonds ₹10,000 crore: AA (Stable) reaffirmed.
• Infrastructure bonds ₹1,000 crore: AA (Stable); reaffirmed and withdrawn.
• Senior bonds ₹3 crore: AA (Stable).
• Basel III Tier II bonds ₹3,100 crore: AA (Stable).
• Basel III Tier II bonds ₹1,900 crore: AA (Stable); reaffirmed and withdrawn.
• Fixed deposits programme: AA (Stable).
• Certificates of deposit ₹35,000 crore: A1+.

Rationale & Key Metrics

• Profitability improving; recoveries from stressed assets aid earnings.
• Tier I 26.38% and CRAR 26.92% as of 30 Jun 2026.
• Liquidity robust: LCR 120.87%, NSFR 115.61%.
• NIMs expected to compress near term due to funding costs.
• Vulnerable loan book SMA 1.74% of standard advances as of 30 Jun 2026.
• Deposit growth steady; CASA 43.64%; ownership change monitorable.
• Ongoing ownership transition with GoI/LIC; final stakeholder alignment awaited.

Outlook & Sensitivities

• Outlook: Stable.
• Upward rating potential if market position, asset quality, profitability strengthen with capital cushions.
• Downgrade risk if asset quality deteriorates or RoA falls below 0.8% and capital cushions fall below 3%.

Rating Action

• Reaffirmed short-term CARE A1+ on Certificate of Deposit.

Instrument Details

• Certificate of Deposit, Regulator RBI, ₹35,000 crore, Rating CARE A1+.

Rationale

• Improved asset quality and profitability due to reduced credit costs.
• Comfortable capitalisation with CAR 26.92% and Tier-I 26.38% (June 30, 2026).
• RAM-focused retail book now ~70% of total advances.
• CASA deposits around 44.6% as of March 31, 2026; deposit mix improving.
• NIM declined to 3.18% in FY26; PAT rose 27% to ₹9,513 crore.
• Liquidity strong: LCR 120.87%, NSFR 115.61% as of June 30, 2026.
• Asset quality improved: GNPA 2.32% (Mar 31, 2026); NNPA 0.16% (Jun 30, 2026).

Liquidity & Capitalisation

• LCR 120.87%, NSFR 115.61% as of 30-Jun-2026; excess SLR ₹29,600 crore.

Material Changes

• No material change since last rating; rating reaffirmed.

Outlook

• Outlook: Not applicable.

Rating Sensitivities

• Deterioration in asset quality with NNPA above 1% sustained.
• CAR cushion below 3.5%.
• ROTA below 0.8% sustained.

Share volume clarification

• Affirms compliance with LODR; no material undisclosed information; disinvestment process managed by DIPAM with ongoing disclosures.