........The entire banking sector, including new licensees will have to raise huge sums in Tier-I capital over the next four years to meet Basel III norms. That means an expansion of capital base, including equity. In theory, that should reduce valuations. FPO and debenture issues will be successful only if floated by institutions with good reputations and decent balance sheets. The divide between low-valued PSU banks and high-valued private banks may grow. The RBI does a fair job in maintaining balance sheet standards. However, it cannot plug political gaps. It doesn't possess complete regulatory control of Cooperatives - most banking sector scams have a Co-op component. ..........
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