Comparative Analysis of Capital Adequacy and Asset Quality of PSBs in India before and after Covid 19
Author : Vedananda Prabhu PG
Abstract :
Our analysis of the financial performance of twelve Public Sector Banks (PSBs) in India, focusing on Capital Adequacy and Asset Quality before and after the COVID-19 crisis, presents insightful findings. The significant improvements in both the Capital Adequacy Ratio (CAR) and the Net Non-Performing Assets (NNPA) to Net Advances Ratio post-crisis suggest a positive trend in the financial health of these banks. These observations align with broader industry trends. For instance, the Economic Survey 2021-22 reported that the GNPA ratio of PSBs decreased from 9.4% in September 2020 to 8.6% in September 2021, while the Capital Adequacy Ratio improved from 14.32% in March 2019 to 16.54% in September 2021. India Budget+2India Budget+2India Budget+2 Additionally, the Press Information Bureau highlighted that the Gross NPA ratio of PSBs declined from 14.6% in March 2018 to 5.53% in December 2022, and the Capital Adequacy Ratio improved from 11.5% in March 2015 to 14.5% in December 2022. Press Information Bureau. These improvements can be attributed to several factors, including enhanced regulatory oversight, implementation of asset quality reviews, and strategic reforms aimed at strengthening the banking sector's resilience. The adoption of Basel III norms has also played a crucial role in bolstering capital buffers, enabling banks to better absorb financial shocks.Journal ARJASS. However, it's important to note that while aggregate figures show improvement, variations exist among individual banks. For example, Punjab & Sind Bank reported a Gross NPA ratio of 14.18% and a Net NPA ratio of 8.03% for the fiscal year ending 2019-20. Such disparities underscore the need for targeted interventions and continuous monitoring to ensure sustained improvements across all PSBs.Wikipedia. In conclusion, your study corroborates existing evidence of enhanced financial stability among PSBs post-COVID-19. Ongoing reforms, vigilant asset quality management, and adherence to capital adequacy norms are essential to maintain and further this positive trajectory.
Keywords :
Capital Adequacy, Asset Quality, PSBs in India, Shapiro-Wilk Test, Paired t-test, Covid-19 Crisis.
