CARE Ratings Reaffirms Central Bank of India’s A1+ Rating on ₹20,000 Crore Certificate of Deposit Programme

Central Bank of India has managed to retain its CARE A1+ rating owing to its Rs 20,000 crore certificate of deposit program. According to CareEdge Ratings, the bank has improved its capital position, government support, and loan portfolio, although profit margin and asset quality remain a cause for concern.

The rating affirmation was made on October 7.

CARE A1+ sits at the highest end of CareEdge’s short-term rating scale and indicates a very strong degree of safety regarding timely payment of financial obligations.

The latest review does not represent a rating upgrade. It means the existing rating has been maintained.

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Stronger Capital Position Supports Rating

One of the main factors behind the reaffirmation is Central Bank of India’s improved capital position.

The bank reported a capital adequacy ratio of 18.28% as of June 30, 2026, up from 17.91% at the end of March. Its CET-1 and Tier-I ratio stood at 16.54%.

CareEdge noted that the bank has benefited from government capital infusions over the years, along with improving internal earnings and additional capital raised more recently.

Central Bank of India raised ₹1,500 crore through a qualified institutional placement in March 2025.

The bank also has board approval to raise up to ₹7,000 crore through Basel III instruments during FY27, subject to the necessary regulatory approvals.

Government Remains Majority Shareholder

Government ownership remains another important factor in the rating assessment.

Following an offer for sale, the government’s holding in Central Bank of India stood at 81.19% as of May 26, 2026.

CareEdge said it expects need-based government support to continue, considering the government’s majority ownership and the wider role of public-sector banks in India’s financial system.

The rating agency identified a reduction in government ownership below 51% as one of the factors that could put downward pressure on the rating.

Loan Book Grows 19% in FY26

Central Bank of India’s lending business also expanded during the last financial year.

Gross advances reached ₹3.45 lakh crore at the end of March 2026, compared with ₹2.90 lakh crore a year earlier, translating into growth of about 19%.

Much of the portfolio remains concentrated in retail, agriculture and MSME lending.

These three areas together accounted for 68.09% of total advances at the end of FY26, compared with 66.90% a year earlier.

Retail loans made up around 30% of overall advances, while agriculture and MSME loans contributed roughly 18% and 20%, respectively.

Bad Loans Continue to Come Down

The bank’s asset quality has improved considerably from the levels seen several years ago.

Its gross non-performing asset ratio declined to 2.67% in March 2026 from 3.18% a year earlier. By the end of June, the ratio had improved further to 2.60%.

Net NPA remained at 0.49% in the June quarter.

CareEdge attributed the improvement to lower fresh slippages, recoveries, upgrades, write-offs and growth in the overall loan book.

Still, the rating agency described Central Bank of India’s asset quality as moderate compared with peers despite the progress made in recent years.

It identified a sustained rise in gross NPAs to 5% or above as one of the potential triggers for a rating downgrade.

Deposits Rise to ₹4.68 Lakh Crore

Central Bank of India’s deposits grew about 13% during FY26, rising to ₹4.68 lakh crore from ₹4.13 lakh crore a year earlier.

Its current and savings account deposits, commonly known as CASA, also grew, although at a slower pace.

CASA represented 47.18% of deposits at the end of March, down from 48.75% a year earlier. The share slipped further to 46.54% by June 30.

Despite that decline, CareEdge noted that Central Bank of India continues to have one of the higher CASA proportions among public-sector banks.

Maintaining that deposit mix while competing for deposits will remain an important factor for the bank’s margins.

Profit Grows Despite Interest Margins Under Pressure

The Central Bank of India reported a profit after tax of ₹4,369 crore for FY26, up from ₹3,785 crore the previous fiscal year.

Income was higher at ₹42,341 crore compared with ₹3,785 crore.

However, there was an interesting development on the interest margin front.

Net interest margin declined to 2.79% for FY26 from 3.05% in FY25 due to quicker adjustments in the rate at which loans were being lent than deposited.

Net interest income during the first quarter of FY27 stood at ₹3,914 crore compared with ₹3,383 crore in the corresponding quarter of the previous fiscal year.

Profits for the quarter grew to ₹1,324 crore from ₹1,169 crore.

It is expected that protecting margins will continue to be critical for Central Bank of India while retaining their CASA base going forward.

Liquidity Remains Comfortable

Liquidity was another supportive factor in the rating assessment.

Central Bank of India reported a liquidity coverage ratio of 156.59% as of June 30, while its net stable funding ratio stood at 128.25%.

Both were above the regulatory requirement of 100%.

The bank also had around ₹9,300 crore of excess statutory liquidity ratio investments at the end of June.

What CareEdge Will Be Watching

While the A1+ rating has been reaffirmed, CareEdge identified several areas that could influence future assessments.

The bank’s ability to keep fresh bad loans under control, continue improving profitability and maintain adequate capital buffers will remain important.