Utkarsh Small Finance Bank Limited — Credit Ratings, 20-06-2025: Credit Rating

CARE Ratings has reaffirmed Utkarsh Bank’s Tier II bonds rating at CARE A+ but revised the outlook from Stable to Negative. The downgrade in outlook reflects ongoing stress in the bank’s microfinance portfolio, which has deteriorated asset quality and profitability in FY25 and is expected to persist into the first half of FY26. This outlook revision signals increased credit risk concerns, potentially leading to higher borrowing costs and cautious investor sentiment, thereby constraining the bank’s financial flexibility in the near term.