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Indian banks face huge Basel III challenge 

October 19, 2015

Babu Das Augustine, Banking Editor, Gulf News

India’s banking sector is expected to face huge challenges in meeting the globally mandatory Basel III banking norms by March 31, 2019, according to a recent study by the Association of Chambers of Commerce (ASSOCHAM) India and the National Institute of Bank Management (NIBM).

Given the credit growth expected in the short to medium short, the capital requirement of the Indian banks would cross Rs5 trillion (about $77.4 billion) according to the ASSOCHAM-NIBM study.

The study said banks in the public sector will find it very challenging to meet the Basel III requirements as the majority of the funds need to be inducted by the Government of India, as it owns majority stakes in them.

With the assumption of at least 20 per cent credit growth in the short- to medium-term, core equity needs are likely to be about $25 billion (Dh91.78 billion) while non-equity requirements through Tier-I and Tier II bonds are set to be about $55 billion.

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