Nepal SBI Bank Receives Double A Rating for Strong Stability and Reliability

14th November 2025, Kathmandu

Nepal SBI Bank (NSBL) has once again secured the prestigious Double AA ([ICRANP-IR] AA) rating from ICRA Nepal, signifying the bank’s exceptional financial strength, high credit quality, and low credit risk.

SBI Bank AA Rating

This reaffirmation highlights the bank’s strong capacity to meet its financial obligations in a timely and reliable manner. Furthermore, the rating for the bank’s subordinated debenture has also been reaffirmed at L Double AA ([ICRANP] LAA), indicating a high degree of safety for the instrument itself.

The Meaning of the Double AA Rating

The [ICRANP-IR] AA (Issuer Rating) assigned by ICRA Nepal is a high-level credit quality rating. For a financial institution, this rating conveys that it has a high degree of safety regarding the timely servicing of its financial obligations. Essentially, it means the bank carries a very low credit risk. The ‘AA’ rating is only one notch below the highest possible rating, ‘AAA’, placing Nepal SBI Bank among the most secure financial entities in Nepal.

The [ICRANP] LAA rating for the subordinated debenture means the specific debt instrument itself is considered to have a high degree of safety concerning timely payment and also carries very low credit risk. The ‘L’ prefix indicates a rating for a long-term instrument (maturity exceeding one year).

Key Drivers of Nepal SBI Bank’s Strong Rating

The consistently high rating is primarily driven by several powerful structural and operational factors:

Strong Promoter Profile and Backing: The most significant strength is the bank’s major shareholder, the State Bank of India (SBI), which holds a 55 percent ownership stake. SBI is a colossal Indian banking entity and its majority ownership provides Nepal SBI Bank with unparalleled managerial, financial, and operational backing. The Employees Provident Fund (EPF) also holds a substantial 15 percent stake, further reinforcing the promoter group’s strength.

Technical and Management Support: Nepal SBI Bank benefits from a long-running Technical Support Service Agreement (TSSA) with the State Bank of India. This TSSA ensures continuous operational assistance, including the deputation of experienced SBI officers to key management roles, such as the Managing Director/CEO, Deputy CEO & CFO, and Chief Operating Officer. This strengthens the bank’s underwriting norms, risk management framework, and overall governance.

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Established Track Record: Operating since 1993, Nepal SBI Bank is the first Indo-Nepal joint venture in the financial sector, giving it an established track record and a strong, recognizable franchise within the Nepali market.

Future Focus Areas and Key Monitorables

While the rating is high, ICRA Nepal has also outlined areas that the bank must focus on to maintain and enhance its credit profile, particularly in a challenging economic environment:

Asset Quality Management: The bank is expected to continue focusing on managing risks and effectively controlling its portfolio, specifically addressing potential stress from the rescheduled and restructured loans.

Capital and Liquidity: The bank’s ability to maintain strong capital cushions above the regulatory minimum is critical for absorbing any near-term credit shocks. It must also maintain a comfortable liquidity profile to manage its day-to-day operations effectively.

Profitability Improvement: To enhance profitability, a key focus area remains increasing the proportion of low-cost deposits, specifically the Current and Savings Accounts (CASA) mix. A lower CASA ratio compared to some top-tier peers can lead to a relatively higher cost of funds, which pressures the bank’s net interest margins and overall base rate competitiveness.

By addressing these strategic focus areas, Nepal SBI Bank aims to further solidify its position as one of Nepal’s leading and most trusted financial institutions, benefiting from the robust foundation provided by its international parentage and long-standing operational stability.

For More: SBI Bank AA Rating