Based on the quarterly results of Q2 FY 2022, i.e. September 30, 2021 and the RBI's Prompt Corrective Action framework
Table of Contents
Testing methodology
There are 34 Schedule Commercial Banks (12 Public Sector Banks & 22 Private Sector Banks) and all of them were tested.
The rankings are arrived at by analyzing banks based on RBI's own formula for diagnosing unhealthy banks. It is called the Prompt Corrective Action Framework.
The four parameters of the Prompt Corrective Action (PCA) framework are
- Capital (CRAR and CET-1 ratios)
- Asset Quality (Net NPA ratio)
- Profitabilty (Return on assets)
- Leverage (Tier 1 leverage ratio)
Since these terms seem quite complex, I have broke them down for non banking folks to understand in a separate post below.

- Each parameterg in the PCA framework, i.e. CRAR, Asset Quality (NNPA ratio), RoA and Leverage ratio gets equal weightage in the score.
- Max score is 4.00
- Even a level 1 breach in CRAR, Asset quality and Leverage ratio would mean that a bank gets 0 marks for that parameter.
- However, I have given fractional scores for profitability (RoA) as follows:
- If a Bank has negative RoA in FY2021, but positive RoA in the preceding year (i.e. FY2020), I have given it 0.75
- If a Bank has negative RoA for 2 consecutive years but a positive RoA in FY2018, I have given it 0.5
- If a Bank has negative RoA for 3 consecutive years but has a positive Roa in FY2017, I have given it 0.25
- If a Bank has negative RoA for 4 consecutive years it gets 0.
Banks under Prompt Corrective Action Framework
[i.e. Banks who aren't in good shape according to RBI as on September 30, 2021]
UCO Bank might exit the PCA framework thanks to Govt infusion of capital (from your taxes of course)
Central Bank likely to be out of PCA framework in some three months
It would be prudent to avoid exceeding the deposit insurance limit in these banks, atleast until they are out of the PCA framework.
What happens if a Bank is put under the PCA framework?
Within the PCA framework, RBI has three risk thresholds for banks. It carries out certain mandatory actions (described in the below table) if a bank falls into any of the three thresholds. In addition, it may make further discretionary actions at all three thresholds depending on the seriousness of the situation. You can read more about it on the RBI circular.
Risk Thresholds for Banks as per RBI PCA Framework
Specifications | Mandatory actions |
---|---|
Risk Threshold 1 [RT1] | Restriction on dividend distribution/remittance of profits. Promoters/owners/parent in the case of foreign banks to bring in capital |
Risk Threshold 2 [RT2] | In addition to mandatory actions of Threshold 1, Restriction on branch expansion; domestic and/or overseas Higher provisions as part of the coverage regime |
Risk Threshold 3 [RT3] | In addition to mandatory actions of Threshold 1, Restriction on branch expansion; domestic and/or overseas Restriction on management compensation and directors’ fees, as applicable |
Ranking
[Updated for Q2 - September 30, 2021. You can check individual parameters for your bank in this spreadsheet. Max score that a bank can achieve is 4.00)]
Bank Name | Score | Comments |
---|---|---|
Axis Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Catholic Syrian Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
City Union Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Development Credit Bank | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Dhanlaxmi Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Federal Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
HDFC Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
ICICI Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
IndusInd Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Jammu & Kashmir Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Karnataka Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Karur Vyasa Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Kotak Mahindra Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
RBL Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
South Indian Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Yes Bank Ltd | 3.50 | Made losses in FY2020 & FY2021 |
Bandhan Bank | 4.00 | Meets all RBI PCA parameters as per the latest available results |
IDFC First Bank Ltd | 4.00 | Meets all RBI PCA parameters as per the latest available results |
State Bank of India | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Bank of Baroda | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Bank of India | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Bank of Maharashtra | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Canara Bank | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Indian Bank | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Indian Overseas Bank | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Union Bank of India | 4.00 | Meets all RBI PCA parameters as per the latest available results |
UCO Bank | 4.00 | Meets all RBI PCA parameters as per the latest available results |
Notes
- SBI, HDFC and ICICI are the safest banks by virtue of being declared too big to fail by RBI. It doesn't hurt that they are also financially healthy as well.
- Some banks had not made certain data available yet as the time of this writing. As it is not possible to make a comparision without that data, I have not scored them. If it is updated after this is published, please do reach out to me and I'll update them.
- Tamilnadu Mercantile Bank Ltd, Punjab National Bank, Punjab & Sind Bank, Central Bank of India, IDBI Bank & Nainital Bank Ltd have not made their BASEL III disclosures (including leverage ratio) available yet for Q2 FY2022.
Despite popular request, I have left out foreign banks and small finance banks for this quarter as it is difficult to get hold of their data.
Feel free to share this with your friends and family who might benefit from knowing the status of their Bank's health. Do reach out to me in case of queries or errors, if any.
References
- https://www.axisbank.com/shareholders-corner/financial-results-and-other-information/quarterly-results
- https://www.csb.co.in/investor-relations
- https://www.cityunionbank.com/investor/about-cub/quarterly-results
- https://www.dcbbank.com/pdfs/DCB-Bank-Announces-Third-Quarter-Results-FY-2020-21-Mumbai-January-23-2021.pdf
- https://www.dhanbank.com/investor_relations/inv_financials.aspx
- https://www.federalbank.co.in/financial-result
- https://www.hdfcbank.com/personal/about-us/investor-relations/financial-results
- https://www.icicibank.com/aboutus/qfr.page?#toptitle
- https://www.indusind.com/in/en/investors/investor-landing.html
- https://www.jkbank.com/investor/financials/earningsUpdates.php
- https://karnatakabank.com/investor-portal/financial-results
- https://www.kvb.co.in/about-us/financial-performance/
- https://www.kotak.com/en/investor-relations/financial-results/quarterly-results.html
- https://www.nainitalbank.co.in/english/Financial_Highlights.aspx
- https://ir.rblbank.com/
- https://www.southindianbank.com/content/financial-results/904
- https://www.tmb.in/financial-performance-highlights.aspx
- https://www.yesbank.in/about-us/investors-relation/financial-information/financialresults
- https://www.bandhanbank.com/Financial-results.aspx
- https://www.idfcfirstbank.com/Investor-relation/financial-results.html
- https://idbibank.in/idbi-bank-financial-result.asp
- https://sbi.co.in/web/investor-relations/reports
- https://www.bankofbaroda.in/financial-reports.htm
- https://www.bankofindia.co.in/FinancialResult
- https://www.bankofmaharashtra.in/financial_results
- https://canarabank.com/User_page.aspx?othlink=379
- https://www.centralbankofindia.co.in/English/investor_relation.aspx
- https://www.indianbank.in/departments/financial-results/#!
- https://www.iob.in/Financial_perf
- https://www.pnbindia.in/financials-current.html
- https://www.psbindia.com/content/financial
- https://www.unionbankofindia.co.in/english/financial-result.aspx
- https://www.ucobank.com/english/quarterly-results.aspx