Mumbai, Dec 3 (IANS) Indian banks are well capitalised and can comfortably adjust to the latest international regulatory framework Basel III, Reserve Bank of India (RBI) Governor Duvvuri Subbarao said Friday.
‘Our assessment is that at the aggregate level Indian banks will not have any problem in adjusting to the new capital rules both in terms of quantum and quality,’ Subbarao said at the Bankers Conference (Bancon 2010) here.
He said Indian banks would not be affected by the new norms as they are comfortably placed on all the parameters of the capital requirements both in terms of quality and quantum.
‘Indian banks are comfortably placed in terms of compliance with the new capital rules,’ Subbarao said in his inaugural address at the two-day conference organised by the RBI.
He pointed out that aggregate capital to risk-weighted assets ratio of Indian banking system stood at 11.7 percent as on June 30, 2010, against the Basel III requirement of 10.5 percent.
Tier-I capital of Indian banks constitute 9 percent against Basel III requirement of 8.5 percent and common equity capital stood at 7.4 percent of Indian banks at the end of the first quarter of the current fiscal against Basel III requirement of 7 percent.
RBI governor said banks would review their Basel III compliance position after publication of the final Basel III rules by the end of this year.
The new international regulatory framework for banks called Basel III was announced in September 2010.
The framework is aimed to prevent any repeat of the international financial crisis. Under the new framework banks are required to hold top-quality capital of at least 7 percent of their risk-wearing assets, up from just two percent required under the current Basel II norms.
Subbarao said a few individual banks in India may fall short of the Basel III norms and will have to augment their capital in a bid to become compliant with the new framework.
‘As the phase-in time allowed is long enough, these banks should be able to make a comfortable adjustment to the enhanced requirement,’ he added.
