Punjab & Sind Bank credit rating on three Tier-II bond series has been reaffirmed at CARE AA; Stable by CARE Ratings, the public sector lender said in a BSE filing on August 22, 2026. The rating action covers bonds with an aggregate outstanding amount of Rs 1,237.30 crore.

The reaffirmation applies to Series XIV and Series XVI of Rs 500 crore each, along with Series XV of Rs 237.30 crore. Punjab & Sind Bank disclosed the rating action under Regulations 30 and 51 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.

Instrument Amount Rating and outlook
Tier-II Bond Series XIV Rs 500 crore CARE AA; Stable
Tier-II Bond Series XV Rs 237.30 crore CARE AA; Stable
Tier-II Bond Series XVI Rs 500 crore CARE AA; Stable

Asset quality and capitalisation support rating

CareEdge said the reaffirmation considers improvement in the bank's asset quality during FY26, aided by recoveries and lower incremental slippages. The assessment also factors in majority Government of India ownership and expected support, comfortable capitalisation, profit accretion in recent years and the bank's established presence in northern India.

The bank's gross non-performing asset ratio improved to 2.40% as of March 31, 2026, from 3.38% a year earlier, while the net NPA ratio declined to 0.79% and subsequently to 0.65% as of June 30, 2026. Its capital adequacy ratio stood at 17.61% and Common Equity Tier-I ratio at 16.56% as of June 30.

CareEdge expects the bank's net interest margin to recover in line with the industry trend as its business mix shifts towards higher-yield retail products. The agency also expects advances to grow faster than the industry, supported by comfortable capitalisation.

Profitability and stressed assets remain constraints

The rating agency said profitability remains moderate compared with peer banks because of high interest expenses and operating costs, a sizeable holding of non-earning zero-coupon recapitalisation bonds and a relatively low share of current and savings account deposits. Geographical concentration in northern India, particularly New Delhi and Punjab, was also cited.

Net stressed assets were about 15% of net worth as of March 31, 2026, before easing to about 13% by June 30. The Stable outlook reflects CareEdge's expectation of continued earnings growth, further improvement in asset-quality parameters and comfortable capitalisation over the near-to-medium term.

The agency identified sustained GNPA above 5%, weaker capitalisation or dilution of government support as potential negative rating triggers. It also noted that Basel III Tier-II bonds carry a Point of Non-Viability trigger, under which investors may suffer a loss of principal if the trigger is determined by the Reserve Bank of India.

Source: BSE corporate announcement.