The Hindu Business Line : ‘Banks sound in key financials’

Mumbai, Nov. 27 In what can be seen as a testimony to the booming banking industry in the country, the Scheduled Commercial Banks (SCBs) are on a firm footing in key financials, according to the Reserve Bank of India (RBI).

In terms of two crucial soundness indicators, capital and asset quality, the Indian banking sector remained comfortably placed at the end of March 2007, the RBI said in its report on trend and progress of banking in India 2006-07 released here on Tuesday.

The strong credit growth for the third year in the succession, continued to be underpinned by significant improvement in asset quality. “`The gross NPAs declined in absolute terms during 2006-07 albeit marginally as NPAs recovered and written off exceeded the fresh addition of them during the year,” the report said.

The overall gross NPAs of SCBs, which had declined sharply by Rs 8,276 crore during 2005-06, declined by Rs 611 core in 2006-07. Gross NPAs as a percentage of gross advances declined to 2.5 per cent from 3.3 per cent at the end of March 2006.

On the capital adequacy front, the CRAR of all SCBs remained at the previous year’s level of 12.3 per cent. The increase in capital kept pace with sharp increase in risk-weighted assets. “The CRAR (at 12.3 per cent) was placed significantly above the stipulated minimum of 9.0 per cent,” the report pointed out.

The CRAR of five largest banks in the country showed a divergent trend from the previous year. In 2005-06, the CRAR of all banks except ICICI Bank declined. However, during the period under review, all banks except ICICI Bank, registered an increase, the RBI said.

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