<p>This research delves into the connection between bank capital and banking competition in India. From 1999–2000 to 2021–2022, the sample contains 68 commercial banks operating in India from the public, private, and foreign sectors. Panzar-Rosse H index result indicates that monopolistic conditions now prevail in the Indian banking business. Furthermore, for both the complete sample and the subsamples, we find a negative bidirectional relationship between competitiveness and bank capital using the generalised method of moments technique within the Granger causality framework. The negative consequences of competition on capital are consistent with the competitive fragility theory. This is based on the premise that banks cannot collect monopoly rents in a market with fierce competition. As a result, financial institutions will see a decline in their profitability, capital ratio, and charter value. The competitiveness of banks and the availability of capital are inversely related. Higher regulatory capital requirements may create entrance obstacles for new banks, decreasing competition and signalling an opportunity for established banks to strengthen their position in the market. Finally, we check to see whether our empirical estimates hold across different subsamples defined by ownership, size, capitalisation, and periods, and we find that they do. Our research suggests that, from a policy perspective, central authorities might work to ensure the smooth operation of the banking sector by requiring new entrant banks to obtain licences before they can begin operations.</p>