RBI unhappy with capital base of state-run banks

Mumbai: The Reserve Bank today expressed concern over the deteriorating capital positions of public sector banks, though their capital adequacy remains above the statutory requirement.

“Continuing with past trend, the capital to risk-weighted assets ratio (CRAR) remained above the stipulated 9 per cent norm both at the system and bank group levels in 2012-13, but showed a declining trend,” the RBI said in its annual ‘Trends and progress of banking in 2012-13’ report.

Under Basel I, PSU banks’ CRAR stood at 11.31 percent at end-March 2013 as against 11.88 percent a year ago, while under Basel II it stood at 12.38 per cent against 13.23 percent previous year.

Private-sector banks’ CRAR stood at 15.10 percent under Basel I while under Basel II CRAR was 16.84 percent.

“Deteriorating capital positions of public sector banks is a matter of concern given the fiscal implications of capital infusion in these banks,” the RBI said.

However, as they migrate to the advanced Basel III framework, both the quantity and quality (common equity) of capital will need to improve, while meeting the growing credit needs of the economy and maintaining the floor for public ownership, the RBI said.

In FY13, the government infused Rs 12,500 crore capital into PSU banks as against Rs 12,000 crore in FY12. In the current fiscal, the government has announced Rs 14,000 crore capital infusion into PSU banks.

PTI