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:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Public Health

REUTERS SHOWCASE

Airtel Profit Jumps

Airtel Profit Jumps

Bharti Q2 net profit more than doubles   Full Article 

Maruti Earnings

Maruti Earnings

Maruti Suzuki net profit up 29 percent, beats estimates.  Full Article 

ICICI Results

ICICI Results

ICICI Bank Q2 profit up 15 percent, beats estimates.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Market at Record

Market at Record

Sensex, Nifty hit record highs; reforms outpace hawkish Fed.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

End Of QE

End Of QE

U.S. Fed ends bond buying, exhibits confidence in U.S. recovery.  Full Article 

Samsung Results

Samsung Results

Smartphone woes drag Samsung Elec Q3 profit to more than 3-year low.  Full Article 

Refining Margins

Refining Margins

BPCL aims to double refining margins with refinery expansion.  Full Article 

Reuters India Mobile

Reuters India Mobile

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