Basel-III norms may negatively affect loan growth: S&P

The Reserve Bank of India's proposed guidelines for implementing Basel-III norms may "negatively affect" credit growth of a few Indian banks though it will strengthen their capitalisation and credit profiles, Standard and Poor's said.

The RBI's proposals on capitalisation are more stringent than that of the Basel Committee on Banking Supervision, S&P said in a note on Friday.
"Increased capital requirements could make it harder for Indian banks to grow," the note said.
"But this is unlikely to lead to solvency issues. Delays in raising capital could also limit the credit growth for some banks."
Indian banks should have minimum tier-I capital of 7%, while total capital must be at least 9% of risk-weighted assets under the Basel-III draft guidelines.
Implementation of the minimum capital requirements will begin from January 2013 and should be fully implemented by March 31, 2017.
S&P expects all banks that it rates in India to meet the RBI's requirements within the stipulated timeframe.
However, it does not expect any change in the ratings on these banks as they are in line with the sovereign rating on India, it said.