<p>The Reserve Bank of India’s (RBIs) financial stability report has painted a grim picture of the Indian banking sector in terms of availability of required capital.</p>.<p>“Sensitivity analysis indicates that 18 SCBs, including all public sector banks under Prompt Corrective Action (PCA-PSBs), may fail to maintain the required CRAR under a 2 standard deviation (SD) shock to the GNPA ratio,” the central bank said in the report released on Monday.</p>.<p>In fact, the number of banks that have slipped below the required capital adequacy has gone up to five from one in the first six months of the current financial year.</p>.<p>According to the stress tests conducted by the central bank, as many as eight PSBs under prompt corrective action framework (PCA-PSBs) may have CRAR below the minimum regulatory level of 9% by March 2019 without taking into account any further planned recapitalisation by the government. Together with these, a total of 9 banks may have CRAR below 9% under the baseline scenario.</p>.<p>“However, if macroeconomic conditions deteriorate, ten out of eleven PCA-PSBs may record CRAR below 9% under the severe macro stress scenario. Together with these banks, 13 banks may have CRAR below 9%,” the apex bank said.</p>.<p>The minimum requirement of capital adequacy in Indian banks is 9%, compared with global standards of 8%.</p>.<p>Further, 14 banks are having a capital adequacy ratio between 9% and 12%.</p>.<p>On the bad loans front, the numbers suggest the deterioration in terms of the Gross NPAs. The number of banks with gross NPAs of less than 10% has come down to 33 in September 2018 from 35 in March 2018. On the other hand, the banks having gross NPAs in excess of 10% has gone up to 22 from 20, during the same period of time.</p>.<p>However, overall asset quality showed improvement with SCBs’ gross non-performing assets (GNPA) ratio declining from 11.5% in March 2018 to 10.8% in September 2018.</p>
<p>The Reserve Bank of India’s (RBIs) financial stability report has painted a grim picture of the Indian banking sector in terms of availability of required capital.</p>.<p>“Sensitivity analysis indicates that 18 SCBs, including all public sector banks under Prompt Corrective Action (PCA-PSBs), may fail to maintain the required CRAR under a 2 standard deviation (SD) shock to the GNPA ratio,” the central bank said in the report released on Monday.</p>.<p>In fact, the number of banks that have slipped below the required capital adequacy has gone up to five from one in the first six months of the current financial year.</p>.<p>According to the stress tests conducted by the central bank, as many as eight PSBs under prompt corrective action framework (PCA-PSBs) may have CRAR below the minimum regulatory level of 9% by March 2019 without taking into account any further planned recapitalisation by the government. Together with these, a total of 9 banks may have CRAR below 9% under the baseline scenario.</p>.<p>“However, if macroeconomic conditions deteriorate, ten out of eleven PCA-PSBs may record CRAR below 9% under the severe macro stress scenario. Together with these banks, 13 banks may have CRAR below 9%,” the apex bank said.</p>.<p>The minimum requirement of capital adequacy in Indian banks is 9%, compared with global standards of 8%.</p>.<p>Further, 14 banks are having a capital adequacy ratio between 9% and 12%.</p>.<p>On the bad loans front, the numbers suggest the deterioration in terms of the Gross NPAs. The number of banks with gross NPAs of less than 10% has come down to 33 in September 2018 from 35 in March 2018. On the other hand, the banks having gross NPAs in excess of 10% has gone up to 22 from 20, during the same period of time.</p>.<p>However, overall asset quality showed improvement with SCBs’ gross non-performing assets (GNPA) ratio declining from 11.5% in March 2018 to 10.8% in September 2018.</p>