India’s Leading BFSI and FinTech Companies 2021

19 Capital Adequacy of Indian SCBs Improves to 14.8% in FY20 The capital-to-risk weighted assets ratio (CRAR) of SCBs has consistently improved since March 2015 and continued to do so in FY20. The consistent performance has been on account of the phased implementation of Basel III. Bank mergers during the year have also helped improve capital adequacy of the constituent banks on the back of pooled resources and other economies of scale. Overall, decline in gross non-performing assets and fresh slippages, improved profitability and restriction on dividend pay-outs helped in strengthening banks’ capital positions. Non-Performing Assets Gross Non-Performing Assets (GNPA) continued to moderate in FY20, after touching a peak inMarch 2018. This was driven by lower slippages and resolution of few large accounts through the Insolvency and Bankruptcy Code. SCBs witnessed a decline in the quantum of GNPAs for the second consecutive year, largely driven by write-offs. The GNPA ratio stood at 7.5% as of 30 Sep 2020. The accretion to NPAs would have been higher in the absence of the asset quality standstill prompted by RBI in response to COVID-19. Going forward, the asset quality of the banks may decline sharply amidst rising uncertainty induced by the pandemic and its real economic impact. 0 2 4 6 8 10 12 14 16 FY15 FY16 FY17 FY18 FY19 FY20 Capi tal to Risk Weighted Assets Ratio (CRAR) 0 2 4 6 8 10 12 FY15 FY16 FY17 FY18 FY19 FY20 Gros s NPAs as percentage of Gross Advances Source: RBI Dun & Bradstreet