Classifieds | Archives | Jobs | About TGT | Contact | Subscribe
 | 
Last updated 0 minute ago
Printer Friendly Version | TGT@Twitter | RSS Feed |
HOME LOCAL MIDEAST ASIA WORLD BUSINESS SPORT OPINION WRITERS
State-run banks need more capital: RBI governor
August 21, 2017
 Print    Send to Friend

MUMBAI: State-run banks will need more capital to resolve bad loan problems weighing on their balance sheets, Reserve Bank of India (RBI) Governor Urjit Patel said, adding his voice to calls for increased capital injections into lenders.

More than $150 billion of bad debt is crimping credit growth in Asia’s third-largest economy and the government and central bank have been trying to ease the burden on state-run lenders, which account for 70 per cent of all lending, to get more credit flowing.

Patel said that the regulatory challenges of tackling bad loans were compounded by the weak capital position of some banks, particularly those owned by the government.

“The success and credibility of all the resolution efforts would be critically contingent on the strength of public sector bank balance sheets to absorb the costs,” Patel told a conference on Saturday in Mumbai.

“The government and the Reserve Bank are in dialogue to prepare a package of measures to shore up capital in a time bound manner.”

Extra capital could be raised either by getting funds from the market, through the government diluting its stake in state-run banks, through additional government capital infusions, or the sale of non-core assets and mergers among lenders, he said. “The early signs are encouraging. However we all must realise it will be a long haul before the intended objective are fully achieved,” the governor said.

Patel also said that banks, whose weak lending discipline he blamed for the mountain of problem loans, would need to take haircuts as they tackle bad debts.

Moody’s Investors Service said in June that the 11 Indian state-run banks that it rates could need up to 950 billion rupees ($14.8 billion) in equity capital by March 2019, far above the 200 billion rupees the government plans to inject into state banks by then.

The central bank in June identified 12 of India’s biggest loan defaulters and said creditors must pursue bankruptcy proceedings against them, part of a new bankruptcy regime that regulators are compelling lenders to use to recover debts.

India’s Finance Minister, Arun Jaitley, said on Saturday that effective supervision was needed to ensure a company’s functioning did not come to a standstill, and that its valuable assets were preserved, during the insolvency process.

Meanwhile, India called for more monetary easing as it flagged risks to economic growth and budget targets, citing a series of disinflationary impulses weighing on Asia’s third-largest economy.

Reuters

Add this page to your favorite Social Bookmarking websites
Comments
 
Post a comment
 
Name:
Country:
City:
Email:
Comment:
 
    
    
Related Stories
Fiscal pressures emerge for several states on expenditure side: RBI
MUMBAI: Fiscal pressures are emerging for several states on the expenditure side, under committed heads, said a Reserve Bank of India (RBI) report. Entitled ‘State Fin..
Forex reserves deplete by $1.75 billion, shows RBI data
MUMBAI: India’s foreign exchange (Forex) reserves depleted by $1.75 billion during the week ended June 29. According to the Reserve Bank of India’s (RBI) weekly statistic..
RBI enhances housing loan limits under PSL
MUMBAI: The Reserve Bank of India (RBI) enhanced the housing loan limits under priority sector lending (PSL) to Rs35 lakh in metropolitan centres under the affordable hou..
RBI urges NBFCs to lend more to small, medium sectors
Mumbai: Non-banking financial companies (NFBCs) need to focus more on medium and small enterprises, the returns from which are much higher than from large corporates to w..
Forex reserves deplete by $593.7 million, RBI data shows
MUMBAI: India’s foreign exchange (Forex) reserves depleted by $593.7 million as on June 1, an official data showed. According to the Reserve Bank of India’s (RBI) week..
FRONTPAGE
 
GALLERY
 
PANORAMA
 
TIME OUT
 
SPORT
 
 
Advertise | Copyright