RBL Bank Tier-II Bond Rating Upgraded to CARE AAA After Emirates NBD Capital Infusion

What Happened ?

key details

Rating Action:

• CARE upgraded the rating on ₹800 crore Tier-II Bonds to CARE AAA; Stable.
• Previous rating was CARE AA- with Rating Watch Positive.
• CARE A1+ rating on ₹6,000 crore Certificates of Deposit was reaffirmed.
• Stable outlook has been assigned to the upgraded long-term rating.

Key Rating Drivers:

• Emirates NBD infused approximately ₹26,016 crore into RBL Bank.
• Net worth increased to approximately ₹42,000 crore as of June 30, 2026.
• Emirates NBD became the promoter with around 60% shareholding.
• The transaction is expected to increase Emirates NBD’s stake to nearly 62% after the proposed amalgamation of its Indian operations, subject to regulatory approvals.
• CARE expects continued financial and strategic support from Emirates NBD. 

Business & Capital Position:

• Estimated post-infusion Capital Adequacy Ratio (CAR) improves to around 35.30%.
• FY26 advances grew 23.34% YoY to ₹1,14,232 crore.
• Deposits increased approximately 25% YoY to ₹1,39,018 crore.
• The bank continues expanding its secured retail lending portfolio while reducing exposure to unsecured products. 

Asset Quality & Profitability:

• Gross NPA improved to 1.45% from 2.60%.
• FY26 Profit After Tax increased to ₹822 crore from ₹696 crore.
• Total income rose to ₹18,457 crore.
• Profitability remained moderate because of elevated credit costs and investments in business expansion.
• CARE noted continued stress in unsecured lending segments such as credit cards and microfinance, although exposure has reduced. 

Note:

• The rating upgrade materially strengthens RBL Bank’s standing in debt markets.
• Stronger capital buffers provide capacity for future balance-sheet expansion.
• Strategic backing from Emirates NBD enhances financial flexibility and long-term stability.
• Investors should continue monitoring execution of retail portfolio diversification and improvement in funding mix. 

Risk Analysis

Summary:

• Despite the rating upgrade, CARE Ratings highlighted that RBL Bank continues to face risks from its unsecured lending portfolio, relatively high dependence on bulk deposits, modest CASA ratio, and moderate profitability.

Key Risks:

• Elevated stress in credit card, personal loan and microfinance portfolios.
• Continued reliance on bulk deposits increases funding cost sensitivity.
• CASA ratio remains below several large private sector peers.
• Profitability remains constrained by higher credit costs and operating expenses.
• Future rating sensitivity depends on maintaining asset quality and adequate capital buffers. 

Worst Case:

• A sustained deterioration in asset quality, weakening promoter support, or a decline in capital adequacy below CARE’s expectations could result in downward rating pressure.

Risk Level: Medium

Company Commentary

• RBL Bank informed the exchanges that CARE Ratings upgraded the Tier-II Bond rating to CARE AAA; Stable.
• The bank stated that the Certificate of Deposit programme continues to carry a CARE A1+ rating.
• The detailed rating rationale issued by CARE Ratings has been placed on the bank’s website in compliance with SEBI regulations.