The government may look at reducing its stake in public sector banks as one of the options to meet capital requirements norms under Basel III to be implemented by March 31, 2018, Reserve Bank of India governor D Subbarao said on Saturday. He said Indian banks need to raise Rs.1.5 lakh crore to R1.75 lakh crore as capital to meet the Basel-III requirements.
Basel III international accounting standards were conceived after the 2008-09 financial crisis to strengthen banks’ capital base and improve their ability to withstand shocks.
“The question is can PSU banks mobilise this sort of capital, or can the government give this sort of capital? We are aware of the constraints on the government,” the RBI governor said. “The alternate is either to reduce shareholding below 50% or slow down PSU growth,” Subbarao said.
He was, however, hopeful that the banks in private sector may be able to raise the capital.
“Can private banks raise this sort of money? They probably can, because R50,000 crore was raised in the past five years,” Subbarao said.
Posted in: Economy
