In­dian banks need US $ 65bn cap­i­tal to meet Basel rules by March 2019 - Fitch

Daily Mirror (Sri Lanka) - - FOREIGN -

In­dian banks will need ad­di­tional cap­i­tal of US $ 65 bil­lion to meet all of global Basel III bank­ing rules by March 2019, with staterun lenders ac­count­ing for 95 per­cent of the re­quire­ments, Fitch Rat­ings said yes­ter­day.

That is far above the US $ 11 bil­lion in cap­i­tal in­fu­sions into state-run lenders the govern­ment has bud­geted through March 2019, with US $ 3 bil­lion due to be in­jected in the 2017/18 and 2018/19 fis­cal years.

Fitch’s lat­est es­ti­mate is lower than its pre­vi­ous call of US $ 90 bil­lion as weaker-than-ex­pected loan growth re­duced cap­i­tal re­quire­ments, but the credit rat­ing agency con­tin­ued to warn that In­dian lenders “have lim­ited op­tions to raise the cap­i­tal they still re­quire”.

Stressed loans in In­dian banks hit a record US $ 150 bil­lion at the end of De­cem­ber, with state-run lenders ac­count­ing for the bulk of it.

“State banks are un­likely to be freed from their cur­rent grid­lock un­less NPL (non-per­form­ing loan) res­o­lu­tion is ac­com­pa­nied by ad­di­tional cap­i­tal,” Fitch said in its state­ment.

It added the cap­i­tal re­quire­ments at In­dian state-run lenders re­mained hefty due to sev­eral fac­tors, in­clud­ing low com­mon eq­uity ra­tios and pro­vi­sion­ing re­quire­ments for new loans.

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