India’s Leading BFSI Companies 2020

XVIII The return on assets (RoA) and the return on equity (RoE) of various bank groups declined during 2017-18. These ratios turned negative for SCBs as a whole. PSBs had to undergo significant erosion in RoE due to contraction in net profit. RoA and RoE of all SCBs remained negative during FY2019 as well. Capital to risk-weighted assets ratio 11 11.5 12 12.5 13 13.5 2012 2013 2014 2015 2016 2017 2018 2019 The capital to risk-weighted assets ratio (CRAR) of SCBs edged up during fiscal 2019with the phased implementation of Basel III. Besides higher provisioning requirements, banks are augmenting capital partly in anticipation of the implementation of Indian Accounting Standards (Ind-AS), which would require provisions for expected credit loss from the time a loan is originated rather than waiting for trigger events. Non-performing assets Gross NPAs as percentage of Gross Advances 0 2 4 6 8 10 12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 The GNPA ratio of all SCBs declined in fiscal 2019 after rising for seven consecutive years, as recognition of bad loans neared completion. While a part of the write-offs was due to ageing of the loans, recovery efforts received a boost from the IBC. The restructured standard advances to gross advances ratio began declining after the asset quality review (AQR) in 2015 and reached 0.55 per cent at end of March 2019. Policy environment 1. Monetary Policy and Liquidity Management: The stance of monetary policy shifted from neutral to calibrated tightening in October 2018 as elevated levels of oil prices exacerbated risks to the inflation outlook. Subsequently, with inflation outcomes surprising on the downside, the focus turned to slowing growth. Accordingly, the policy rate was reduced successively in the next five meetings of the MPC in February, April, June, August, and October 2019. While the Reserve Bank’s forex operations and currency Dun & Bradstreet