Need Rs 2.3 lakh crore to meet Basel-III norms: SBI

RBI says banking system will collectively require Rs 5,00,000 crore to implement Basel-III capital needs

The nation's largest lender State Bank of India (SBI) needs Rs 2,30,000 crore in additional capital to meet the stringent Basel III requirements till 2018, a top official has said.

"We need about Rs 2,30,000 crore of additional capital for Basel III up to 2018. Out of this, Rs 1,50,000 crore is of tier I and the rest Rs 80,000 in tier II capital," SBI managing director and chief financial officer Diwakar Gupta told PTI here in an interaction.

Gupta, who is retiring after nearly four decades at SBI towards the end of the month, further said the requirement is for a five-year period. The bank is comfortable on the capital front at present and also expressed confidence that the lender will be able to manage this huge amount, he added.

According to the Reserve Bank (RBI), the banking system will collectively require Rs 5,00,000 crore to implement the Basel-III capital needs. Basel-III is the newer international standard of capital allocation devised and adopted following the 2008 financial crisis.

The Basel III measures lay a lot of emphasis on increasing the buffers, which can help in times of difficulty and avoid the stress spilling over to other markets in the highly interconnected financial system.

The Reserve Bank introduced the Basel III capital regulations for banks effective this fiscal year. The capital requirements will be phased over a period, up to March 2018, nine months ahead of the Basel Committee phase-in.

According to experts, some of the required money will come through internal accruals aqnd some part will have to be raised from the market.

Gupta said for SBI, it is important to time the capital raising appropriately, as other banks will also be looking to raise capital.

"When the whole banking industry will need money, we need to time our capital raising accordingly. Therefore, the sooner we go to the market, the better it is," he said.

Gupta, however, expressed reservations if this is the right time to do so, citing highly volatile capital markets.

For this fiscal, the bank can collect upwards of Rs 20,000 crore, which will include infusion from the government, from the market as well as from internal accruals.

The government is likely to infuse Rs 4,000 crore into the bank this fiscal out of the Rs 14,000 crore planned towards recapitalising the nationalised banks this fiscal.

Gupta said the government owns a little over 62% in the bank and that there is a scope for getting it down to up to 58% levels for the additional capital raising.

SBI, whose capital adequacy stood at 12.92% as of March 2013, had received an infusion of Rs 7,900 crore from the government last fiscal.