Bank of Baroda's ₹5,700 crore NMC settlement to weigh on FY27 profitability
MUMBAI: State-owned Bank of Baroda has agreed to pay $600 million, or approximately ₹5,700 crore, in an out-of-court settlement to resolve years-long litigation linked to
MUMBAI: State-owned Bank of Baroda has agreed to pay $600 million, or approximately ₹5,700 crore, in an out-of-court settlement to resolve years-long litigation linked to the collapse of United Arab Emirates (UAE)-based healthcare provider NMC Health. The one-time payout, equivalent to nearly 28% of the lender's fiscal year 2026 (FY26) net profit of ₹20,021 crore, is expected to dent earnings in the coming quarters, although analysts say it is unlikely to affect the bank's long-term growth prospects or capital position. “The bank has not made a provision for the settlement and treated it as a contingent liability, which means it's a fresh hit on the company’s profit and loss account,” said Akshay Tiwari, associate vice president and research analyst at Asit C Mehta Investment Intermediates. Sunny Agrawal, head of fundamental research at SBI Securities, said the settlement amount will likely impact first or second quarter earnings and will also weigh on FY27 profitability. However, since it is a one-off event, the bank is likely to continue growing in double digits, with an annual profit potential of ₹20,000 crore and above, Agrawal added. “Bank of Baroda continues to have a healthy capital position, and the settlement is unlikely to affect its long term financial stability or growth prospects,” said Abhinav Tiwari, research analyst at Bonanza.
An email sent to Bank of Baroda earlier on Friday remained unanswered till press time. Also Read | State-run banks lag private lenders in deposit growth What was the litigation about? According to Bank of Baroda's FY26 annual report, the administrators handling the bankruptcy of NMC Group had sued Bank of Baroda, former promoter of NMC Group B.R. Shetty and former NMC executive Prashant Manghat before courts in the Abu Dhabi Global Market and the UK. The administrators alleged that NMC Group collapsed because of fraud committed by some shareholders, senior management and employees between 2012 and 2020. The administrators had also alleged that Bank of Baroda's Abu Dhabi branch helped process financing transactions that enabled NMC Health and its related entities to conceal their true financial position, as per news reports. They further alleged that the bank, along with several other lenders, failed to carry out adequate anti-money laundering, know-your-customer (KYC) and other due diligence checks, allowing the alleged fraud to continue for longer and increasing losses for creditors. The litigation stemmed from insolvency and civil proceedings initiated before the Abu Dhabi Global Market Court of First Instance and the High Court of Justice of England & Wales in relation to NMC Health and its group companies.
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