S&P assigns ‘BBB’ credit rating to Bank of Maharashtra, signals growing stability

S&P Global Ratings on 24 September assigned ‘BBB’ long-term and ‘A-2’ short-term credit rating to Bank of Maharashtra (BOM), underlining the lender’s growing stability and appeal to investors.

“Our ratings reflect extraordinary support from the government of India if needed. The long-term rating on BOM is one notch above our assessment of its stand-alone credit profile (SACP) as 'bbb-'. We see a very high likelihood that the government would provide the bank with timely and sufficient extraordinary support in the event of financial distress,” the ratings agency said.

S&P’s decision to assign a ‘BBB’ rating reflects confidence in the bank’s ability to meet its financial commitments. The rating also signals to investors and depositors that Bank of Maharashtra is considered a stable institution with a positive outlook for the future. The short-term ‘A-2’ rating further supports the view that the bank can handle its immediate financial obligations without difficulty.

S&P Global expects a loan growth of 14%-15% over the next two years. “We anticipate the bank’s risk-adjusted capital (RAC) ratio will strengthen to about 10.5%-11% over the next two years, from 10% (calibrated for an economic risk score of ‘5’ and our ‘BBB’ long-term sovereign rating on India) as of March 31, 2025. This is despite high projected loan growth of about 14%-15% per annum over the next two years,” it noted while explaining the rationale behind the ratings.

Upside and downside scenario

Explaining the downside scenario, the agency said it could downgrade BOM if it lowers sovereign ratings on India or if it revises downward its assessment of the SACP for the bank. “We could lower the SACP one notch if the bank’s RAC ratio falls sustainably below 10%. This scenario could occur if its above-average credit growth is not sufficiently backed by timely capital raisings,” it said.

While S&P noted that a ratings upgrade looks unlikely over the next two years, it could upgrade BOM if it raises the sovereign ratings on India and revise the bank’s SACP upward.

Shares of Bank of Maharashtra settled at ₹56.34 apiece on the BSE, 1.47% down from its previous close, while the benchmark Sensex closed 386.47 points or 0.47% lower at 81,715.63 on September 24.

Disclaimer: Parts of this story are generated from AI