MUMBAI, Dec 7: Even as many weak public sector have managed to reach the 8 per cent capital adequacy ratio (CAR) as stipulated by the Reserve Bank of India, many of the private sector banks are lagging behind their public sector counterparts in this regard. While UCO Bank and Indian Bank are the only two public sector banks left out to achieve the 8 per cent CAR, four private sector banks have very poor CAR level.

According to the RBI's "Report on trend and progress of banking in India", Catholic Syrian Bank has the lowest capital adequacy ratio of 2.51 per cent out of 34 private banks. In 1996-97, the Kerala-based CSB has only marginally improved its CAR from 2.25 per cent to 2.51 per cent - the lowest CAR in the banking sector. The bank has been taken over by the Siam Vidhya group. A low CAR reflects the poor financial health of a bank in terms of risk weighted asset in its portfolio.

Other private banks with low CAR are Bareilly Corporation Bank (2.95%), Benares State Bank Ltd (2.99%) and Lord Krishna Bank (5.4%). While the CAR of Benares State Bank Ltd has declined from 3.41 per cent, Nedungadi Bank and Sangli Bank have been able to reach the 8 per cent mark from 4.34 per cent, 6.21 per cent respectively.

Among public sector banks, Indian Bank has the lowest CAR with a negative 18.81 CAR followed by UCO Bank with 3.16 per cent. UCO's position has weakened from 7.83 per cent last year. Andhra Bank and Central Bank of India which were the weakest of nationalised banks have managed to reach the magic 8 per cent figure.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.