IDFC First Bank's Debt Instruments Rated ICRA AA+/Stable; NCDs Withdrawn
ICRA reaffirmed IDFC First Bank's debt instruments (Basel III Tier II Bonds, Infrastructure Bonds) at AA+/Stable, totaling ₹12,520 crore. Matured NCDs of ₹3,883.70 crore were withdrawn. The bank reported a CETI ratio of 13.73% and CRAR of 15.60% as of March 31, 2026. RoA was 0.44% in FY2026, impacted by a ₹646 crore fraud charge.
The reaffirmation of a strong credit rating (AA+/Stable) for a significant portion of the bank's debt instruments is positive. While the withdrawal of ratings for matured NCDs is routine, the overall rating stability provides confidence to investors. However, the impact is not high as it concerns existing debt ratings and not a new fundraising event.
The credit rating has been reaffirmed at AA+/Stable, indicating a positive outlook on the bank's financial health and its debt instruments. The withdrawal of ratings for matured NCDs is a routine process and does not impact the bank's current financial standing negatively.
ICRA Limited has reaffirmed the rating of IDFC First Bank's Basel III Tier II Bonds and Infrastructure Bonds, amounting to ₹12,520 crore, at ICRA AA+/Stable. The rating agency has also withdrawn the rating for matured Non-Convertible Debentures (NCDs) totaling ₹3,883.70 crore, as these have been fully redeemed.
The reaffirmation considers the bank's comfortable capitalisation profile and its ability to raise capital promptly to support growth. As of March 31, 2026, the bank reported a Common Equity Tier I (CET I) ratio of 13.73% and a Capital to Risk-Weighted Assets Ratio (CRAR) of 15.60%. Despite modest internal accruals and elevated operating expenses due to scaling up retail operations and new products, the bank's net interest margins remain above the private sector average.
The bank's profitability was impacted by industry-wide stress in the microfinance portfolio and a one-off cost of ₹646 crore in Q4 FY2026 for a fraud incident reported in February 2026. Consequently, the Return on Average Total Assets (RoA) moderated to 0.44% in FY2026 from 0.48% in FY2025. Adjusting for the one-time fraud expense, the adjusted RoA for FY2026 was 0.57%, indicating an improving earnings trajectory. ICRA expects the bank's profitability to improve steadily, driven by a reduction in its cost-to-income ratio and credit costs.
IDFC First Bank's deposit base grew by 16.8% year-on-year to ₹2.94 lakh crore as of March 31, 2026. The Current Account Savings Account (CASA) ratio improved to 49.8%, and retail deposits constituted 79% of total customer deposits. The bank's gross funded book increased by 20% YoY to ₹2.90 lakh crore, with a sustained focus on the retail, rural, and SME segments.
Asset quality shows improvement, with the gross fresh slippage rate decreasing to 3.7% in FY2026 from 4.2% in FY2025. Credit costs also declined to 2.1% of average net advances. The bank's liquidity position remains strong, with an LCR of 114% and an NSFR of 119% as of March 31, 2026.
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