Tier 1 capital ratio of Indian banks among the lowest

How India compares with other countries as far as bank capital adequacy is concerned


India is the third from bottom, and only Russian and Chilean banks have a worse ratio. Photo: Mint
India is the third from bottom, and only Russian and Chilean banks have a worse ratio. Photo: Mint

Much has been written about the need for infusing capital in Indian banks, particularly in some state-run lenders.

How does India compare with other countries as far as bank capital adequacy is concerned?

The chart, taken from the International Monetary Fund’s (IMF’s) latest Global Financial Stability Report, shows the Tier 1 capital ratio for major emerging market economies.

India is the third from bottom.

Only Russian and Chilean banks have a worse ratio.

And banks in the advanced economies too all have higher Tier 1 ratios than Indian lenders.

This chart underscores the dire need for the government to recapitalize many of its banks.

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