RETAIL BANKING | Cesar Tordesillas, India

Indian Banks need US$90B more capital under Basel III

Indian banks needs an additional US$90 billion to meet Basel III capital Requirements by March 2018.

Reserve Bank of India governor, Dr Duvvuri Subbarao, said of the figure, non-equity capital would be US$58.5 billion and equity capital US$31.5 billion.

These estimates, he said, were based on two conservative assumptions covering the period to March 31, 2018, namely, risk-weighted assets of individual banks would increase by 20 per cent per annum; and internal accruals would be of the order of one per cent of risk-weighted assets.

"Given that the government owns 70 per cent of the banking system, the burden of recapitalisation to maintain the shareholdings at the current level would be US$16.22 billion," he said at the annual FICCI-IBA Banking Conference in Mumbai.

However, if the government decided to reduce its shareholding in every bank to a minimum of 51 per cent, the burden would be reduced to under US$12.66 billion, he added.

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