Soundness Indicators of Public and Private Sector Banks: a Comparative Study

Abstract

Financial Crisis 2008-09 ascertained the connotation of bank performance in national as well as international economies. Thus, falling short of managing capital standards has received a great deal of consideration from regulators and researchers to maintain the capital adequacy requirements. Maintaining capital adequacy and asset quality are two important soundness indicators of banks. In this paper we analyses and compare the status of capital adequacy ratio in the light of Basel Norms of selected Public and Private Sector Banks in India from 2006-2014, and also assess the quality of assets by examining the ratio of Gross Non Performing Assets of banks. W? find that all the Public and Private Sector Banks are maintaining the prescribed norm of CRAR by RBI i.e. 9% and BCBS i.e. 8%.Category wise CRAR of Private Sector Banks is much higher than Public Sector Banks. Public Sector Banks pose poor quality of assets as their NPAs show increasing trend. Contrarily Private sector Banks demonstrate less credit defaults