A survey by industry body Confederation of Indian Industry (CII) shows that key performance indicators of banks like credit growth, net interest income deteriorated in 2012-13.
The survey, in which 5 public sector banks (PSBs), 3 private sector banks and 7 foreign banks participated, showed that growth in profit after tax (PAT) and return on equity also deteriorated in the current financial year.
Moreover, the respondents of the survey expect that banks may face increased pressure on their financial health owing to stricter regulatory requirements going ahead.
The CII Survey titled ‘Health of Indian Banking sector in current regulatory environment’ assessed the prevailing market conditions vis-à -vis asset quality, capitalisation of banks and growth estimate of the banking sector while focusing upon the current regulatory environment and its impact on bank business and profitability.
The Basel III capital requirements may have the highest impact on profitability of the Indian banking sector followed by the revised guidelines on Priority Sector Lending (PSL), the survey shows.
Further, higher provisioning norms for restructured assets are also expected to have major impact on bankÂ’s profitability as highlighted by the respondent banks.
The Gross NPAs level of the Indian banking sector which was already at its highest level in last six years (as at end March 2012) is expected to worsen with significant rise in restructured loan accounts, the survey shows.
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