Saturday, November 12, 2011

Indian banks not facing any stress, says RBI

NEW DELHI, November 12, 2011(Tehelkanews)

Amid contradictory ratings by global agencies, the Reserve Bank of India on Friday said the Indian banking sector was not facing any stress, though state-owned lenders need capital infusion.

"Overall, we don\'t see any fundamental stress on the banking system as a whole. So we are nowhere close to the problem," RBI Deputy Governor Subir Gokarn told reporters on the sidelines of an Assocham event here.

His comments come within days of ratings firm Moody\'s downgrading the outlook of the Indian banking system to 'negative\', from 'stable\'. Another rating agency Standard & Poor\'s, however, upgraded the ranking saying domestic regulations in India are in line with global standards.

"There are of course long-term issues of capital. If the system is growing at 20 per cent a year, it needs the capital to grow at 20 per cent at a year... It is not any indication of systemic threat," Dr. Gokarn added.

He, however, admitted that there could be some pressure points on the banking system on account of high interest rates.

The capital requirement of PSU banks, including SBI, for the fiscal has been estimated at between Rs.10,000 crore and Rs.20,000 crore. The government has already made a provision to infuse Rs.6,000 crore in public sector banks in the current fiscal.

As regards the increase in non-performing assets (NPAs) of the banking sector, he said, "NPAs are increasing, but it is not dramatic.\'\'

NPAs of state-owned banks have increased to 2.31 per cent of their assets at the end of March, 2011, from 2.27 per cent in the year-ago period.

As at the end of the September quarter, gross NPAs of country\'s largest lender SBI stood at 4.19 per cent, higher than 3.38 per cent in the year-ago period.

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