Forbearance gives Indian banks time to build capital buffers: Fitch

No need for equity capital till FY25 to meet 8% CET1 level

Rating agency Fitch today said the regulatory forbearance has reduced the Indian banking sector’s need for fresh core capital to meet minimum regulatory capital requirements. Under the base case, the sector will not need fresh equity capital to meet the minimum common equity Tier 1 (CET1) requirement of eight per cent until the financial year ending March 2025 (FY25).

"However, the sector would require $27 billion in fresh capital under a stress case, which incorporates less benign economic assumptions," Fitch said.

In 2020, the agency had estimated higher system capital needs of $15 billion and $58 billion under moderate and high stress