Restrictive regulatory regime

Rather than inject fresh capital only into banks that transgressed most, and punish all equally with draconian restrictions for transgressions of few, a judicious lowering of CARs will help all banks

The lead editorial in Business Standard on Friday, August 10, 2018, titled “Don’t ignore risks” opines that bringing the Reserve Bank of India’s (RBI) capital adequacy requirements to Basel III standards “would be an imprudent course to pursue” and that the effort to do so “betrays either a lack of good knowledge of the Indian banking sector or a lack of care.” The edit does not take cognisance of Indian economy’s present structure or growth imperatives.

For several reasons, it is strange for the RBI to insist on 22 per cent higher CET-1 norms for Indian banks than stipulated by Basel