By BS Reporter
The profitability of banks in India may decline sharply as their financial health takes a hit due to rising asset quality pressures and the effect of stricter regulatory requirements, according to a Confederation of Indian Industry (CII) survey.
"Banks expect deterioration in performance on key parameters including credit growth, net interest income and growth in net profit and return on equity for 2012-13. Further, banks are expected to face increased pressure on their financial health owing to stricter regulatory requirements, going ahead," CII said in a statement.
The survey by CII assessed the prevailing market conditions against the asset quality, capitalisation and growth estimates. It also dealt with the impact of the current regulatory environment on bank business and profitability.
A total of 15 banks - five public sector, three private and seven foreign banks, participated in the survey.
On the impact of regulatory requirements, the survey pointed out that Basel-III capital requirements are likely to have the highest impact on profitability, followed by the revised guidelines on priority sector lending .