Thursday, Jul 09, 2020 | Last Update : 07:38 AM IST

106th Day Of Lockdown

Maharashtra2237241231929448 Tamil Nadu118594711161636 Delhi102831742173165 Gujarat37636267441978 Uttar Pradesh2996819627313 Telangana2761216287313 Karnataka2681511100417 West Bengal2383715790804 Rajasthan2140416575472 Andhra Pradesh211979745252 Haryana1799913645279 Madhya Pradesh1562711768622 Bihar12525933898 Assam12523833016 Odisha10097670354 Jammu and Kashmir89315399143 Punjab67494554175 Kerala5895345228 Chhatisgarh3415272814 Uttarakhand3230262143 Jharkhand3018210422 Goa190311568 Tripura171612481 Manipur14307710 Himachal Pradesh107876410 Puducherry104351714 Nagaland6443030 Chandigarh4924017 Arunachal Pradesh270922 Mizoram1971390 Sikkim125650 Meghalaya94432
  Business   In Other News  21 Nov 2018  Easing capital rules get flak

Easing capital rules get flak

THE ASIAN AGE.
Published : Nov 21, 2018, 3:55 am IST
Updated : Nov 21, 2018, 3:55 am IST

Moody’s said that the track record of such dispensations on asset classification, when seen over the last few years in India.

The RBI after a nine-hour marathon board meeting announced on Monday that it has extended the timeline for the Indian banks to set aside an additional 0.625 per cent as capital conservation buffer by one year to March 31, 2020 to help banks to lend more.
 The RBI after a nine-hour marathon board meeting announced on Monday that it has extended the timeline for the Indian banks to set aside an additional 0.625 per cent as capital conservation buffer by one year to March 31, 2020 to help banks to lend more.

New Delhi: Global rating agency Moody’s Investors Service said on Tuesday that the RBI decision to allow lenders more time to adhere to additional capital buffer norms under Basel 3 is credit negative for the state-run banks.

“The decision to extend the timeline for the full implementation of Basel 3 guidelines by a year is a credit negative for Indian public sector banks,” said Srikanth Vadlamani, vice president, financial institutions group, Moody’s Investors Service.

The RBI after a nine-hour marathon board meeting announced on Monday that it has extended the timeline for the Indian banks to set aside an additional 0.625 per cent as capital conservation buffer by one year to March 31, 2020 to help banks to lend more.

“It was our expectation that all public sector banks would have a core equity tier 1 (CET1) ratio of at least eight per cent by the end of March 2019, based on the government’s commitment that it would capitalise all these banks to a level sufficient to meet the minimum regulatory capital norms,” said Mr Vadlamani.

With the regulatory timelines now extended, it may be a case that at least some of the rated public sector banks’ CET1 ratios over the next 12 months would be lower than what we currently expect, said Moody’s.

Moody’s pointed out  that RBI’s board has advised that the central bank should consider a scheme for the restructuring of the stressed standard assets of MSME borrowers with aggregate credit facilities of up to Rs 25 crore , subject to such conditions as are necessary for ensuring financial stability.

“While more details are awaited, this approach has the potential for negative implications for the credit profiles of Indian banks,” it said.

Moody’s said that the track record of such dispensations on asset classification, when seen over the last few years in India, has shown that they have largely been unsuccessful in addressing the underlying stress.

“Keeping stressed loans in the standard category has led to an underestimation of bad loans,” it added.

Tags: moody, rbi