If Basel III is fully phased in 35 quarters the Gross Domestic Product (GDP) growth will dip by 0.22% over 35 quarters, said Reserve Bank of India (RBI) Deputy Governor Anand Sinha mentioning about at a study done by Basel Committee. However, according to Sinha after this period is over the growth path will shift back to the original trend path. Speaking at the the Financial Times-Yes Bank organised banking summit Sinha said the pursuit of financial stability has costs in terms of growth. “The concern that is often voiced is that the capital buffer on the back of much higher level of equity required in the capital structure as per Basel III would leave banks with substantially lower return on equity and it would become difficult to retain investor's interest rendering capital raising difficult,” said Sinha........
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