Mumbai: Rating agency Fitch has estimated that Indian banks are likely to require around $65 billion of additional capital to meet Basel III capital standards that will be fully implemented by the financial year ending March 2019.
It added that the 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.
While the estimate for capital needs have fallen from its earlier projections due to asset rationalisation and weaker than expected loan growth, Fitch however said that state banks, which accounts for 95 per cent of the estimated shortage have limited options to raise the capital they still require.
“Prospects for internal capital generation are weak and low investor confidence impedes access to the equity capital market. Access to the Additional Tier 1 (AT1) capital market has improved in recent months,” Fitch said.