The bank’s gross non-performing assets ratio remained elevated at 7.7% as on March 31, 2026, despite writing off and selling a large portion of stressed loans. A year ago, gross loans were 9.4%.
“Deterioration was evident in the microfinance segment, though delinquencies in other product segments also increased,” the rating company said, adding that fresh slippages remained high even as collection efficiency gradually improved.
The rating agency upgraded the bank’s certificate of deposits to “A1” from the previous “A1+” and subordinated debt to “A-” from “A”.
Elevated credit costs and lower operating efficiency have also weakened the bank’s earnings profile. Ikra said muted growth in the portfolio, shift in interest on NPAs and shift in portfolio mix towards relatively lower yielding asset classes have adversely impacted Utkarsh’s operating profitability.
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