Terming the present capital position of Indian banks as “comfortable”, the RBI Deputy Governor, Subir Gokarn today said raising fresh capital under the Basel-III framework would be a challenge to them.
“... but of course many challenges lie ahead. For example, raising fresh capital to meet the higher capital requirement under Basel-III may pose challenges, especially under an environment characterised by moderating growth and worsening financial conditions,” he said at an ICRIER conference here.
He, however, said, “the Indian banks’ current capital base and the liquidity position are broadly comfortable as a starting point vis is the Basel III guideline.”
“Both the capital to risk assets — risk weighted asset ratio CRAR (capital to risks asset ratio) and core CRAR — of Indian banks at 13.5 per cent and 9.6 per cent at the end how global and domestic economic situation evolve in coming year of September last year remain well above the regulatory requirement of 9 per cent and 6 per cent under Basel II”.
Leverage ratio continues to hover around 5 per cent as against Basel-III requirement of little more over 3 per cent, he said while talking about the fiscal soundness of Indian banks.
Gokarn further said in this context, how global and domestic economic situation evolve in coming years would be very important.
“(Whether) It can sustain turnaround in the global conditions is key to supporting this drive, requirement of banks to raise new capital, raise more capital, in turn, helping sustain credit growth and real economy,” he said.