This is with regard to ‘Basel III could trigger recession' by Mr K Kanagasabapathy “(Business Line, May 11). The new guidelines are far above what is required even under Basel III norms. Internationally, Basel III norms are to be implemented from 2019 whereas the RBI has prescribed that they should be through by 2018. Our banks do not make sub-prime loans. They lend based not only on tangible security but also repaying capacity. Our banks' deposits and resources are mostly used for government borrowings and government directed lending. Considering all these, there should be a relaxation at least for government banks. As for the government's resources to provide capital to banks, the latter's holdings can be diluted. This does not mean necessarily that the government will lose control, as it can continue to have majority voting rights.
- S Kalyanasundaram, Chennai (HBL)
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