Capital Adequacy of Banks in India - Bank Management - Lecture Slides, Slides of Banking and Finance

Download Capital Adequacy of Banks in India - Bank Management - Lecture Slides and more Slides Banking and Finance in PDF only on Docsity! Capital Adequacy of Banks in India Docsity.com Capital to Risk-Weighted Asset Ratio (CRAR) • The Narasimhan committee endorsed the internationally accepted norms for capital adequacy standards, developed by the Basel Committee on Banking Supervision (BCBS) • BCBS initiated Basel I norms in 1988, considered to be the first move towards risk-weighted capital adequacy norms. Docsity.com Basel II • Basel II is a much more comprehensive framework of banking supervision. • It not only deals with CRAR calculation, but has also got provisions for supervisory review and market discipline. • Basel II stands on three pillars: Docsity.com Basel II Pillars • Minimum regulatory capital (Pillar 1): – Revised and extensive framework for capital adequacy standards, where CRAR is calculated by incorporating credit, market and operational risks. • Supervisory review (Pillar 2): – Provides key principles for supervisory review, risk management guidance and supervisory transparency and accountability. • Market discipline (Pillar 3): – Encourages market discipline by developing a set of disclosure requirements that will allow market participants to assess key pieces of information on risk exposure, risk assessment process and capital adequacy of a bank. Docsity.com Capital Adequacy Standard in India • In India, there is a ‘three track’ approach for Basel compliance – Commercial banks are Basel I compliant with respect to credit and market risks – Urban cooperative banks maintain capital for credit risk as per Basel I and market risk through surrogate charges – Rural banks have capital adequacy norms that are not on par with the Basel norms Docsity.com State Bank of India Capital adequacy ratio 14.25 13.39 Capital adequacy ratio - Tier I 9.38 9.45 Capital adequacy ratio - Tier II 4.87 3.94 State Bank of Indore Capital adequacy ratio 13.46 13.53 Capital adequacy ratio - Tier I 7.91 8.58 Capital adequacy ratio - Tier II 5.55 4.95 State Bank of Patiala Capital adequacy ratio 12.60 13.26 Capital adequacy ratio - Tier I 6.94 8.16 Capital adequacy ratio - Tier II 5.66 5.10 Capital Held by Commercial Banks in India (2009 – 2010) Docsity.com State Bank of Travancore Capital adequacy ratio 14.03 13.74 Capital adequacy ratio - Tier I 8.59 9.24 Capital adequacy ratio - Tier II 5.44 4.50 Capital Held by Commercial Banks in India (2009 – 2010) Docsity.com Capital Held by National Banks (2009 – 2010) Allahabad Bank Capital adequacy ratio 13.11 13.62 Capital adequacy ratio - Tier I 8.01 8.12 Capital adequacy ratio - Tier II 5.10 5.50 Andhra Bank Capital adequacy ratio 13.22 13.62 Capital adequacy ratio - Tier I 8.67 8.12 Capital adequacy ratio - Tier II 4.55 5.50 Docsity.com Dena Bank Capital adequacy ratio 12.07 12.77 Capital adequacy ratio - Tier I 6.76 8.16 Capital adequacy ratio - Tier II 5.31 4.61 Indian Bank Capital adequacy ratio 13.98 12.71 Capital adequacy ratio - Tier I 11.88 11.13 Capital adequacy ratio - Tier II 2.10 1.58 Indian Overseas Bank Capital adequacy ratio 13.20 14.78 Capital adequacy ratio - Tier I 7.88 8.67 Capital adequacy ratio - Tier II 5.32 6.11 Capital Held by National Banks (2009 – 2010) Docsity.com Oriental Bank of Commerce Capital adequacy ratio 12.98 12.54 Capital adequacy ratio - Tier I 9.10 9.28 Capital adequacy ratio - Tier II 3.88 3.26 Punjab and Sind Bank Capital adequacy ratio 14.35 13.10 Capital adequacy ratio - Tier I 8.44 7.68 Capital adequacy ratio - Tier II 5.91 5.42 Punjab National Bank Capital adequacy ratio 14.03 14.16 Capital adequacy ratio - Tier I 8.98 9.11 Capital adequacy ratio - Tier II 5.05 5.05 Capital Held by National Banks (2009 – 2010) Docsity.com Syndicate Bank Capital adequacy ratio 12.68 12.70 Capital adequacy ratio - Tier I 7.85 8.24 Capital adequacy ratio - Tier II 4.83 4.46 UCO Bank Capital adequacy ratio 11.93 13.21 Capital adequacy ratio - Tier I 6.48 7.05 Capital adequacy ratio - Tier II 5.45 6.16 Union Bank of India Capital adequacy ratio 13.27 12.51 Capital adequacy ratio - Tier I 8.19 7.91 Capital adequacy ratio - Tier II 5.08 4.60 Capital Held by National Banks (2009 – 2010) Docsity.com City Union Bank Capital adequacy ratio 12.69 13.46 Capital adequacy ratio - Tier I 11.48 12.41 Capital adequacy ratio - Tier II 1.21 1.05 Dhanlaxmi Bank Capital adequacy ratio 15.38 12.99 Capital adequacy ratio - Tier I 13.75 8.80 Capital adequacy ratio - Tier II 1.63 4.19 Federal Bank Capital adequacy ratio 20.22 18.36 Capital adequacy ratio - Tier I 18.42 16.92 Capital adequacy ratio - Tier II 1.80 1.44 Capital Held by Old Private Banks (2009 – 2010) Docsity.com ING Vysya Bank Capital adequacy ratio 11.65 14.91 Capital adequacy ratio - Tier I 6.89 10.11 Capital adequacy ratio - Tier II 4.76 4.80 Jammu & Kashmir Bank Capital adequacy ratio 14.48 15.89 Capital adequacy ratio - Tier I 13.80 12.79 Capital adequacy ratio - Tier II 0.68 3.10 Karnataka Bank Capital adequacy ratio 13.48 12.37 Capital adequacy ratio - Tier I 10.60 9.98 Capital adequacy ratio - Tier II 2.88 2.39 Capital Held by Old Private Banks (2009 – 2010) Docsity.com Karur Vysya Bank Capital adequacy ratio 14.92 14.49 Capital adequacy ratio - Tier I 14.40 12.88 Capital adequacy ratio - Tier II 0.52 1.61 Lakshmi Vilas Bank Capital adequacy ratio 10.29 14.82 Capital adequacy ratio - Tier I 8.81 12.01 Capital adequacy ratio - Tier II 1.48 2.81 Nainital Bank Capital adequacy ratio 13.10 15.68 Capital adequacy ratio - Tier I 11.85 14.38 Capital adequacy ratio - Tier II 1.25 1.30 Capital Held by Old Private Banks (2009 – 2010) Docsity.com Capital Held by Private Sector Banks (2009 – 2010) Axis Bank Capital adequacy ratio 13.69 15.80 Capital adequacy ratio - Tier I 9.26 11.18 Capital adequacy ratio - Tier II 4.43 4.62 Development Credit Bank Capital adequacy ratio 13.30 14.85 Capital adequacy ratio - Tier I 11.50 11.93 Capital adequacy ratio - Tier II 1.80 2.92 Docsity.com HDFC Bank Capital adequacy ratio 15.69 17.44 Capital adequacy ratio - Tier I 10.58 13.26 Capital adequacy ratio - Tier II 5.11 4.18 ICICI Bank Capital adequacy ratio 15.53 19.41 Capital adequacy ratio - Tier I 11.84 13.96 Capital adequacy ratio - Tier II 3.69 5.45 IndusInd Bank Capital adequacy ratio 12.55 15.33 Capital adequacy ratio - Tier I 7.65 9.65 Capital adequacy ratio - Tier II 4.90 5.68 Capital Held by Private Sector Banks (2009 – 2010) Docsity.com Kotak Mahindra Bank Capital adequacy ratio 20.01 18.35 Capital adequacy ratio - Tier I 16.13 15.42 Capital adequacy ratio - Tier II 3.88 2.93 Yes Bank Capital adequacy ratio 16.60 20.60 Capital adequacy ratio - Tier I 9.50 12.90 Capital adequacy ratio - Tier II 7.10 7.70 Capital Held by Private Sector Banks (2009 – 2010) Docsity.com Bank of America Capital adequacy ratio 12.73 15.49 Capital adequacy ratio - Tier I 11.23 14.97 Capital adequacy ratio - Tier II 1.50 0.52 Bank of Bahrain & Kuwait Capital adequacy ratio 25.52 25.01 Capital adequacy ratio - Tier I 24.47 24.45 Capital adequacy ratio - Tier II 1.05 0.56 Bank of Ceylon Capital adequacy ratio 45.18 50.85 Capital adequacy ratio - Tier I 44.11 49.49 Capital adequacy ratio - Tier II 1.07 1.36 Capital Held by Foreign Banks (2009 – 2010) Docsity.com Bank of Nova Scotia Capital adequacy ratio 12.70 13.15 Capital adequacy ratio - Tier I 9.75 11.03 Capital adequacy ratio - Tier II 2.95 2.12 Bank of Tokyo-Mitsubishi, UFJ Capital adequacy ratio 29.51 68.16 Capital adequacy ratio - Tier I 28.80 67.40 Capital adequacy ratio - Tier II 0.71 0.76 Barclays Bank Capital adequacy ratio 17.07 16.99 Capital adequacy ratio - Tier I 16.62 16.47 Capital adequacy ratio - Tier II 0.45 0.52 Capital Held by Foreign Banks (2009 – 2010) Docsity.com BNP Paribas Capital adequacy ratio 12.37 15.78 Capital adequacy ratio - Tier I 8.38 10.89 Capital adequacy ratio - Tier II 3.99 4.89 Chinatrust Commercial Bank Capital adequacy ratio 45.40 31.12 Capital adequacy ratio - Tier I 44.75 30.70 Capital adequacy ratio - Tier II 0.65 0.42 Citibank Capital adequacy ratio 13.23 18.14 Capital adequacy ratio - Tier I 12.42 17.27 Capital adequacy ratio - Tier II 0.81 0.87 Capital Held by Foreign Banks (2009 – 2010) Docsity.com JSC VTB Bank Capital adequacy ratio 317.51 225.93 Capital adequacy ratio - Tier I 317.51 225.93 Capital adequacy ratio - Tier II Krung Thai Bank Capital adequacy ratio 81.86 61.02 Capital adequacy ratio - Tier I 80.61 59.77 Capital adequacy ratio - Tier II 1.25 1.25 Mashreqbank Capital adequacy ratio 76.80 78.21 Capital adequacy ratio - Tier I 75.55 76.96 Capital adequacy ratio - Tier II 1.25 1.25 Capital Held by Foreign Banks (2009 – 2010) Docsity.com Mizuho Corporate Bank Capital adequacy ratio 37.58 38.98 Capital adequacy ratio - Tier I 37.29 38.60 Capital adequacy ratio - Tier II 0.29 0.38 Oman International Bank Capital adequacy ratio 25.17 41.08 Capital adequacy ratio - Tier I 23.25 39.83 Capital adequacy ratio - Tier II 1.92 1.25 Royal Bank of Scotland Capital adequacy ratio 12.66 12.50 Capital adequacy ratio - Tier I 7.43 7.94 Capital adequacy ratio - Tier II 5.23 4.56 Capital Held by Foreign Banks (2009 – 2010) Docsity.com Shinhan Bank Capital adequacy ratio 36.80 40.85 Capital adequacy ratio - Tier I 36.35 39.89 Capital adequacy ratio - Tier II 0.45 0.96 Societe Generale Capital adequacy ratio 22.47 22.77 Capital adequacy ratio - Tier I 22.08 21.96 Capital adequacy ratio - Tier II 0.39 0.81 Sonali Bank Capital adequacy ratio 20.31 20.03 Capital adequacy ratio - Tier I 20.10 19.81 Capital adequacy ratio - Tier II 0.21 0.22 Capital Held by Foreign Banks (2009 – 2010) Docsity.com Implementation of Basel II • RBI guidelines on Basel II implementation were released on April 27, 2007. • Banks in India will initially adopt standardized approach for credit risk and basic indicator approach for operational risk. • After adequate skills are developed, both by banks and RBI, some banks may be allowed to migrate towards more sophisticated approaches. Docsity.com Implementation of Basel II •Indian banks will be required to maintain a minimum CRAR of 9 per cent on an ongoing basis. •Banks are encouraged to achieve a Tier I CRAR of at least 6 per cent by March 2010. Docsity.com Basel II Issues and Challenges • Linking credit rating to regulatory capital standards may have severe macro-economic implications. • As the sovereign ratings of developing and emerging countries are not as high as the industrialized and the high income countries, this will have an unfavourable effect on the credit flows to developing and emerging economies. Docsity.com