PSBs Will Need Additional Capital to Meet Adequacy Norms: RBI

New Delhi, Jun 26 (PTI) Reserve Bank Deputy Governor R Gandhi today said state-owned banks are "adequately" capitalised at present but would need additional money to comply with global capital adequacy norms in the future.

PSBs Will Need Additional Capital to Meet Adequacy Norms: RBI

"Right now the banks are adequately capitalised. That is right. What we are telling banks and government is that going forward, keeping in view the future growth that is likely to come in economy and also based on Basel III norms, additional capital will be needed.

"... prevention is better than cure, so if banks are adequately capitalised well in advance, that gives a lot of confidence to banks," Gandhi told reporters on the sidelines of an event organised by industry body Assocham here.

Finance Minister Arun Jaitley had earmarked Rs 7,940 crore in the Budget for recapitalisation of PSU banks during the current fiscal.

Last fiscal, the government infused Rs 6,990 crore in nine public sector banks, including SBI, Bank of Baroda and Punjab National Bank, for enhancing their capital and meeting Basel III norms.

The total government support provided to PSU banks towards capitalisation during the past four years was Rs 58,634 crore.

According to an estimate, public sector banks would need an additional capital of Rs 2.40 lakh crore by 2018 to meet the Basel III capital adequacy norms.

Keeping the huge capital requirements in mind, the Cabinet in December 2014 had allowed public sector banks to raise up to Rs 1.60 lakh crore from markets by diluting government holding to 52 per cent in phases.

On the issue of willful defaulters, Gandhi said that RBI had given certain instructions to banks to deal with the problem of bad loans.

Asked why the joint lending forum has not taken off, the RBI Deputy Governor said, "It (joint lending forum) is a new system. It will take some time.

We are discussing (the progress) with banks." Recently, the Finance Ministry had asked public sector banks to submit their immediate and mid-term capital requirement from the government to comply with global capital adequacy norms and also to fund their growth plans.

We cannot wish away financial frauds but we can minimise their impact, Gandhi said. "Bank's failure to know their customers, employees and partners is the reason behind financial fraud.

A bank should make all effort to know its customers, employees and partners very well," he added. 


Read more about: psbs, rbi
Story first published: Friday, June 26, 2015, 14:25 [IST]
Please Wait while comments are loading...
Company Search
Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

Thousands of Goodreturn readers receive our evening newsletter.
Have you subscribed?