Mumbai: State-run banks will need a bigger recapitalisation to resolve bad loan problems weighing on their balance sheets, the Reserve Bank of India Governor Urjit Patel said on Saturday.

Extra capital will need to be raised in several ways, including raising funds from the market and through the government diluting its stake in state-run banks, Mr Patel told a conference in Mumbai.

He also said that the banks would need to take haircuts as they address bad loans.