Tighter credit norms see bank capital adequacy ratio increase to 13.98 per cent
22 Sep 2009
Banks set aside more capital to cover various risks during 2008-09, which saw their capital adequacy ratio rise to 13.98 per cent as against 13.01 per cent a year ago. With the banks becoming selective in the wake of the global financial crisis, the capital adequacy ratio of private banks have gone up to 15.23 per cent during 2008-09 against 13.24 per cent for the nationalised banks.
According to analysts, with the banks slowing down their lending and becoming selective in extending loans to risk areas, capital adequacy ratio, which is the capital banks keep aside against various kinds of risks, showed a rising tendency.
As per RBI data on `Profile of Banks 2008-09', the capital adequacy of ICICI Bank was at 15.53 per cent as compared with 13.97 per cent in the previous year.
Likewise, the capital adequacy of HDFC Bank stood at 15.69 per cent in 2008-09 as against 13.60 per cent for the previous year.
Among the nationalised banks, State Bank of India's capital adequacy ratio stood at 14.25 per cent in 2008-09 against 13.53 per cent in 2007-08, while that of Punjab National Bank was 14.03 per cent at the end of the last fiscal against 13.4 per cent in the previous year.
The capital adequacy ratio of Canara Bank also increased to 14.1 per cent in 2008-09 from 13.25 per cent in 2007-08 while that for Bank of Baroda stood at 14.05 per cent compared to 12.94 per cent in the previous year.
