Capital ratio dips, profit falls, bad loans rise in FY13

The capital adequacy ratio of banks in India declined, at an aggregate level, at the end of March 2013 compared to a year earlier, the Reserve Bank of India (RBI) said on Monday. This, along with lower profitability in terms of return on assets, higher non-performing assets and an increase in the cost of funds, reflected the stress on domestic banks.

Industry analysts expressed concerns over the dip in capital adequacy ratio as Indian banks would require an estimated Rs 500,000 crore to meet the Basel-III capital norms. The capital adequacy ratio of all scheduled commercial banks in India narrowed to 13.88 per cent at the end of 2012-13 from 14.24 per cent a year earlier. While the capital adequacy ratio of private banks improved by 63 basis points (bps) to 16.84 per cent, it fell sharply, by 85 bps for public sector banks. 

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