Raising capital to meet norms challenge to banks: Gokarn

Terming the present capital position of Indian banks as "comfortable", RBI Deputy Governor Subir Gokran today said raising fresh capital under the Basel-III framework would be a challenge to them.

"But of course many challenges lie ahead. For example, raising fresh capital to meet the higher capital requirement under Basel-III may pose challenges, especially under an environment characterised by moderating growth and worsening financial conditions," he said at a ICRIER conference here.
    
He, however, said, "the Indian banks' current capital base and the liquidity position are broadly comfortable as a starting point vis-à-vis the Basel III guideline."
    
"Both the capital to risk assets risk weighted asset ratio CRAR (capital to risks asset ratio) and core CRAR of Indian banks at 13.5 per cent and 9.6 per cent at the end how global and domestic economic situation evolve in coming year of September last year remain well above regulatory requirement of 9 percent and 6 percent under Basel II.
    
Leverage ratio continues to hover around 5 percent as against Basel-III requirement of little more over 3.0 percent, he said while talking about the fiscal soundness of Indian banks. Gokarn further said in this context, how global and domestic economic situation evolve in coming years would be very important.
    
"(Whether) It can sustain turnaround in the global conditions is key to supporting this drive, requirement of banks to raise new capital, raise more capital, in turn, helping sustain credit growth and real economy," he said.