Union finance minister Pranab Mukherjee has expressed concern over the deteriorating asset quality in the banking sector where non-performing assets had grown faster than credit over the past couple of years.

Inaugurating the platinum jubilee celebrations of Indian Overseas Bank here on Friday, he said banks should tighten their belts to arrest and reverse this trend.

He said, “The latest financial stability report demonstrates that our domestic financial system is robust and our capital adequacy benchmark for banks still remains above the regulatory requirements even under the proposed Basel-III stipulations.

” A more rigorous regime of capital adequacy under Basel-III ould be implemented in phases from 2013 till 2019. “The stringent norms of Basel-III guidelines have also been factored in for maintaining a minimum tier-I capital requirement.”