RBI eases rules on what lenders can count as Basel III capital

MUMBAI (Reuters) - The Reserve Bank of India said on Tuesday it would ease rules on what lenders can count towards their core capital requirements under upcoming Basel III rules, in moves intended to ease pressure on the cash-constrained sector.

Government had estimated last year that lenders would need to raise about $17 billion from markets over four years to meet total funding requirements of about $28 billion beyond projected profits.

In a bid to ease those fundraising pressures, the RBI said lenders can now apply gains from revaluation of property to core capital requirements under certain conditions.

The RBI also said conversions of foreign currency in financial statements can now more easily be considered common equity capital, while also easing rules on counting deferred tax assets.

For full list of requirements see: http://bit.ly/1QjAfVd

The moves could free up an estimated 300-350 billion rupees ($4.42-$5.16 billion) for state-owned lenders and 50 billion rupees for private sector lenders, according to estimates by policy makers.

RBI Governor Raghuram Rajan said in January the central bank was working on identifying undervalued assets and other types of capital that could be counted as capital under Basel III requirements.

($1 = 67.8500 Indian rupees)

(Reporting by Devidutta Tripathy and Suvashree Dey Choudhury; Editing by Rafael Nam and Biju Dwarakanath)