India

Banks are hit hard by the demonetisation aftermath.

Axis Bank is the country's third-biggest private sector lender by assets.

Half of it will have to be met through core equity.

Uncertainties offset the positive effects.

Analysts see positive impact from more CASA deposits.

Some are at risk of breaching their capital triggers, says Fitch.

It may be difficult to generate political support for the potential overhaul.

Moody's says it will enhance systemic stability.

It will reflect the system's credit binge in 2009-12.

Moody's suggests slowing loan growth to single digits to bridge the capital shortfall.

State banks are the most at risk.

As per Reserve Bank of India, the Indian banking system has gross stressed assets of 11.5% of total assets, as of March 2016. Amongst the various categories of banks, the percentage for public sector banks is, as expected, highest at 14.5%.

The classical central banker’s dilemma is how to address the growth versus inflation conflict. The prevailing orthodoxy has remained an independent monetary policy using base interest rates as the primary management tool.

Indian banks will need USD90bn in total additional capital to meet Basel III requirements.

Gross NPL ratio increased sharply to 7.6% in March.

On back of its roaring loan growth.