Monday, September 15, 2014

Indian banks will need more than $200 bn to meet Basel III norms: Fitch



Mumbai: Indian banks will need more than $200 billion to meet Basel III international banking norms by March 2019, Fitch Ratings Inc. said on Monday.

 “The core capital position of the Indian banking system is weaker than that of many Asian banking systems that are also migrating towards the Basel III capital norms,” Fitch said, adding 85% of the capital will go to the public sector banks that have higher proportion of stressed assets and lower profitability than private sector banks. 

State-owned banks’ stressed assets were around 12% of total system assets in the year-ended March, compared with the system average of 10%, according to Fitch, a ratings agency.

 “Private banks are much better positioned in terms of their capital levels and access to markets,” Fitch said in its chart of the month for Asia Pacific banks. 
Stressed assets in the Indian banking system are likely to peak around 2014-15, but there will be near-term pressures due to economic slowdown and existing structural and policy-related constraints, it said. 

“The Indian banks are likely to raise mostly core equity and additional tier 1 capital to meet the capital shortfall,” Fitch said adding the recent amendments in Basel III norms by the Reserve Bank of India (RBI) will “have created a more favourable environment for creditors and broadened the pool of investors.” 

As part of the changes, the minimum maturity period of such bonds have been reduced and banks have been allowed to tap retail investors. The Reserve Bank on 1 September allowed the banks to reduce the minimum maturity period of bonds issued under Basel III and said banks can now tap retail investors.

RANJAY KUMAR,
PGDM 2nd YEAR,
SOURCE - MINT
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)