RBI asks banks to strenghten bad loan monitoring

MUMBAI Thu Nov 8, 2012 5:14pm IST

People walk in front of the Reserve Bank of India (RBI) building in Kolkata May 21, 2012. REUTERS/Rupak De Chowdhuri/Files

People walk in front of the Reserve Bank of India (RBI) building in Kolkata May 21, 2012.

Credit: Reuters/Rupak De Chowdhuri/Files

Related Topics

MUMBAI (Reuters) - Indian banks need to strengthen monitoring of bad loans and also raise capital for the implementation of Basel III guidelines, the RBI said in a report released on Thursday.

Indian banks' net bad loans as a percentage of their advances rose to 1.4 percent in the year ended March 2012, from 1.1 percent in the year-earlier period, with state-run banks posting higher defaults as compared to their private peers, the report said.

"The slippage ratio of the banking system, which showed a declining trend during 2005-08, increased during 2008-12," the Reserve Bank of India said in its annual report on 'Trend and Progress of Banking in India in 2011-12'.

The RBI, in its quarterly review of the monetary policy last month, expressed concern over the significant rise in bad loans and cited lack of transparency in information sharing as a major reason for the defaults.

Further, in the trend and progress report, the central bank said banks will need to raise more capital for meeting higher capital standards, stricter liquidity and leverage ratios and adopt a more cautious approach to risk under Basel III rules.

The RBI estimates that banks will need 1.4-1.5 trillion rupees of common equity to comply with Basel III norms. (Reporting by Neha Dasgupta and Suvashree Dey Choudhury; Editing by Sunil Nair)

FILED UNDER:

Telecom

Reuters Showcase

Insurance Bill

Insurance Bill

Opposition support bolsters prospects for insurance reforms  Full Article 

SBI Share Sale

SBI Share Sale

SBI's up to $2.4 billion share sale likely by end April - sources   Full Article 

Eicher Share Sale

Eicher Share Sale

Truck maker Volvo sells shares in Eicher Motors  Full Article 

Beef Ban

Beef Ban

After beef ban, Hindu groups force abattoirs to close   Full Article 

Monsoon Season

Monsoon Season

Exclusive - India expects better monsoon rains this year  Full Article 

Services Growth

Services Growth

Services growth at eight-month high in Feb - HSBC PMI  Full Article 

'India's Daughter'

'India's Daughter'

Documentary on 2012 Delhi gang rape banned in India  Full Article 

Capex Slashed

Capex Slashed

Cairn India slashes 2015-16 capex on falling crude   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage