According to an estimate, public sector banks will need an additional capital of Rs 2.40 lakh crore by 2018 to meet the Basel III capital adequacy norms.
Reserve Bank Deputy Governor R Gandhi today said that state-owned banks are "adequately" capitalised at present but will need additional money to comply with global capital adequacy norms in the future.
"Right now the banks are adequately capitalised. That is right. What we are telling banks and government is that going forward, keeping in view the future growth that is likely to come in economy and also based on Basel III norms, additional capital will be needed.
"... prevention is better than cure, so if banks are adequately capitalised well in advance, that gives a lot of confidence to banks," Gandhi told reporters on the sidelines of an event organised by industry body Assocham here.
Finance Minister Arun Jaitley has earmarked Rs 7,940 crore in the Budget for recapitalisation of PSU banks in the current fiscal. Last fiscal, the government had issued Rs 6,990 crore to nine public sector banks, including SBI, Bank of Baroda and Punjab National Bank, for enhancing their capital and meeting Basel III norms. While, the total government support provided to PSU banks towards capitalisation during the past four years was Rs 58,634 crore.
According to an estimate, PSUs will need an additional capital of Rs 2.40 lakh crore by 2018 to meet the Basel III capital adequacy norms.
Keeping the huge capital requirements in mind, the Cabinet in December 2014 had allowed PSUs to raise up to Rs 1.60 lakh crore from markets by diluting government holding to 52% in phases.
Gandhi also said that RBI had given certain instructions to banks to deal with the problem of bad loans. However, he added that joint lending forum is a new system and will take some time. "We are discussing (the progress) with banks," he added.
Recently, the Finance Ministry had asked PSUs to submit their immediate and mid-term capital requirement from the government to comply with global capital adequacy norms and to fund their growth plans too.
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