Statsguru: Banking system needs more funds to maintain a minimum CRAR of 9%

For the system as a whole, CRAR would come down from 14% in March 2019 to 12.9% in March 2020 under the baseline scenario

Banking system bad debts are set to improve, but the health of the system in terms of capital remains critical.

Recent capital infusion by the government has helped, but the system needs more funds, especially public sector banks (PSBs), to maintain a minimum capital to risk weighted assets ratio (CRAR) of 9 per cent. For the system as a whole, CRAR would come down from 14 per cent in March 2019 to 12.9 per cent in March 2020 under the baseline scenario, despite improvement in asset quality and recoveries as shown in Chart 1 A. If capital is not infused in