International Finance

Fitch says Indian banks to face $65 billion capital shortage by FY19

Stressed loans in Indian banks hit a record $150 billion at the end of December

Fitch says Indian banks will need additional capital of $65 billion to meet all of global Basel III banking rules by March 2019, with state-run lenders accounting for 95 percent of the requirements

The ratings agency has reduced its capital requirement estimate to $65 billion from its earlier assessment of $90 billion.

Capital needs have fallen from its previous estimate of $90 billion largely as a result of asset rationalisation and weaker-than-expected loan growth, Fitch said.

Fitch on Indian banks- NPL resolution process being led by RBI could potentially release capital if recovery rates are as high as banks and government are hoping for.

Weak capital positions have a major negative influence on Indian banks’ Viability Ratings, which will come under more pressure if the problem is not addressed, the ratings agency added.

Stressed loans in Indian banks hit a record $150 billion at the end of December, with state-run lenders accounting for the bulk of it.

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