SBI Group CAR slips to 13.5% in FY10: RBI

MUMBAI: Even as the the capital adequacy ratios ( CAR) of state-run and private sector banks showed considerable rise, the State Bank Group saw a marginal fall in the same during FY10, the RBI Report on trends and Progress in Banking said.

A higher CAR, which reflects the paid-up capital and reserves of a bank, indicates its better financial health.

While under Basel II, SBI Group had only 13.5 per cent CAR in 2010, it stood at 14 per cent in 2009, and this was 12.1 per cent in 2010 and 12.7 per cent in 2009 under Basel I, says the report.

Against this, PSBs together had a CAR of 13.3 per cent in 2010, and 13.5 per cent in 2009 under Basel II and 12.1 per cent in 2010 and 12.3 per cent in 2009 under Basel I.

In comparison, private banks had higher CAR of 17.4 per cent in 2010 under Basel II, up from 15.2 per cent in 2009, and 16.7 per cent in 2010 and 15 in 2009 under Basel I.

Foreign banks also had a better CAR during the reporting period with their 2010 figure under Basel II standing at 17.3 per cent, significantly higher than 14.3 per cent in 2009.

However, under Basel I, they had a better CAR of 18.1 per cent in 2010 against 15 per cent in 2009.

The average CAR of banks stood at 14.5 per cent in 2010, up from 14 per cent in 2009 under Basel II, and 13.6 per cent in 2010 and 13.2 per cent in 2009. However, the report concludes that, even this lower CAR does not threaten the health of domestic banks as these are well above nine per cent level set by RBI.

At the end of March 2010, the core CAR of domestic banks stood at a healthy 9.4 per cent under Basel I and 10.1 per cent under Basel II. Core capital, measured by the tier 1 capital, make up of over 70 per cent of the total capital base of the country's banks.