Adding equity muscle to banks

These are testing times, indeed, for Indian banks. On the one hand, a slowing economy and repayment stress experienced by corporates have led to a piling up of bad loans. The so-called gross non-performing assets of the banking industry are estimated to have crossed 3 per cent of their total advances. The ratio would probably be twice or more if one also includes cases of ‘corporate debt restructuring' that entail bailouts to troubled borrowers by way of interest rate reductions or rolling over repayment obligations. In such a scenario comes the Reserve Bank of India's (RBI) move to issue the final guidelines for implementation of the latest Basel-III international banking capital regulation norms........

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