Mumbai, May 22 -- The agency has reaffirmed its '[ICRA] A1+' rating on the short-term bank facilities of the bank.

ICRA stated that the revision in the outlook to 'negative' considers the significant deterioration in Utkarsh Small Finance Bank's (Utkarsh) asset quality and earnings profile in FY2025 and the subdued performance expected in the near term.

The deterioration in the asset quality was primarily on account of higher slippages in the microfinance portfolio due to various factors including, but not limited to, overleveraging by borrowers, worsened credit discipline, adverse climatic conditions and other operational challenges like employee attrition.

ICRA takes note of the corrective measures being taken by the bank. Although i...