CARE Upgrades RBL Bank's Tier II Bonds to AAA following Capital Infusion by Emirates NBD

CARE Upgrades RBL Bank's Tier II Bonds to AAA following Capital Infusion by Emirates NBD​

CARE Ratings Limited has upgraded the rating assigned to long-term instruments of RBL Bank Limited (RB) to 'CARE AAA; Stable,' while reaffirming its rating for Certificate of Deposit. The rating action comes after assessing the standalone financial and operational performance of the bank, taking into account linkages with promoter and majority shareholder, Emirates NBD PJSC (ENBD).

The upgrade reflects a significant strengthening of RBL Bank's capitalization profile following a capital infusion of approximately ₹26,016 crore by ENBD. As a result of this injection, the bank’s net worth increased to approximately ₹42,000 crore as of June 30, 2026.

CARE Ratings Limited assigned ratings and provided rationale for RBL Bank's financial instruments as follows:


The rating upgrade is also attributed to RBL's strategic importance within the ENBD group and the expectation of continued shareholder support from ENBD.

Capital Strength and Growth Indicators​

Ratings noted that following the capital infusion by ENBD, which resulted in ENBD holding approximately 60% equity stake in RBL as of June 30, 2026, the bank's financial standing has improved considerably.

As of March 31, 2026, the bank reported a Tier-I capital adequacy ratio (CAR) of 14.25% and an overall CAR of 14.25%. These metrics were substantially strengthened by the infusion, leading to an estimated CAR of approximately 35.30%, based on the risk-weighted assets as of March 31, 2026. This enhanced capital base provides significant room for future business expansion.

The bank demonstrated steady advances growth across both retail and wholesale segments in FY26. Retail segment grew by 20.50% (up from 13.34% in the previous year), while the wholesale segment grew by 27.62% (compared to 5.96%). The overall advances growth stood at 23.34% (versus 10.28%) as of March 31, 2026, when total advances reached ₹1,14,232 crore.

Deposit Base and Asset Quality​

RBL Bank's total deposits grew by approximately 25% year-on-year, reaching ₹1,39,018 crore as of March 31, 2026 (up from ₹1,10,933 crore on March 31, 2025). Despite this growth, the bank faces challenges regarding its deposit concentration, with the top 20 depositors accounting for 15.75% of total deposits as of March 31, 2026.

In terms of asset quality, the gross non-performing asset (GNPA) ratio moderated to 1.45% on March 31, 2026, down from 2.60% in FY25. However, gross slippages remained elevated at 4.14% in FY26 compared to 4.93% in FY25.

Profitability and Strengths​

In fiscal year 2026 (FY26), the bank posted a total income of ₹18,457 crore and profit after tax (PAT) of ₹822 crore, an improvement from the ₹696 crore PAT in FY25. Non-interest income increased by 8% year-on-year to ₹4,121 crore in FY26, supported by higher credit card charges and other miscellaneous income. The cost-to-income ratio moderated to 68.52% in FY26 from 64.67% in FY25.

Key strengths cited include the strong parentage and strategic importance provided by ENBD, which is the second largest bank in the UAE and is backed by the Government of Dubai through its investment arm, Investment Corporation of Dubai (ICD). This positioning provides RBL with significant management control and expected support for scaling up its deposit franchise.

Risk Factors and Outlook​

CareEdge Ratings maintains a stable outlook on the bank, anticipating that it will continue to maintain comfortable capitalization levels while diversifying advances toward secured retail banking. However, ratings also highlighted continued asset quality challenges in unsecured lending segments (personal loans, credit cards, and MFI exposures), which make these segments inherently risk sensitive. The bank's gross non-performing asset (GNPA) ratio is a key monitoring factor alongside the ability to contain overall slippages.

RBLBANK Stock Price Movement​

On Tuesday, shares of RBL Bank Limited shed 0.96%, settling at ₹377.95 after the market close. The stock completed a volatile day, with 6.60 million shares traded as it had previously reached its 52-week high in the session.