Indian banks to face $4-bn capital shortage if Basel-III brought forward: S&P

Standard & Poor’s on Monday said Indian banks could face a $3-4 billion (Rs 16,185-21,600 crore) capital shortfall in maintaining a common equity Tier-I capital ratio of eight per cent if the Reserve Bank of India decides to implement Basel-III norms immediately. High-growth banking systems, such as those in India and China, will face challenges in maintaining or raising capital ratios. The total capital shortfall of major banks in both countries could reach about $100 bn in 2019, it has said.

State-run banks could manage the shortfall without cutting risk assets, as the government might infuse money or they could tap the capital market. The government’s capacity to provide sufficient capital in a timely manner does, however, pose a risk, S&P said.