It is good on the part of RBI to make sure that Indian banks are ready to embrace Basel III, two years ahead, by 2017. Capital is going to become an increasingly scarce commodity in the coming times and especially for public sector banks (PSB) raising capital would be a big challenge (“Core Banking solutions”, FE, January 3). If PSBs are to need an additional capital of R5 lakh crore in the next five years to sustain the growth of 20% per annum, the government is quite unlikely to make this huge budgetary allocation. If the past experience regarding the global financial meltdown is anything to be believed, then the idea of having capital conservation buffer proposed in Basel III is a welcome move aimed at maintaining renewed stability of the financial system.
Srinivasan Umashankar, Nagpur (FE)
