Indian banks to require US$90b in new capital by March 2019

Half of it will have to be met through core equity.

According to Fitch Ratings, capital requirements are set to rise significantly as the Basel III phase-in approaches its advanced stages. Fitch estimates the banks will require around US$90b in new total capital by the financial year ending March 2019 (FYE19) to meet Basel III standards.

"This comes when delayed recognition of problem loans and widespread losses have raised standalone credit risks, and added to capital pressure amidst the risk that capital triggers at some state banks may be breached as minimum capital requirements rise."

Here's more from Fitch:

Eighty percent of the capital needs arise during FY18 and FY19, while more than half of the required new capital will have to be met through core equity; additional Tier 1 (AT1) capital largely accounts for the rest.

State banks need the bulk of the capital, and have weak access to equity markets. The government has been a provider of core equity, but the total earmarked sum of USD10.4bn until FYE19 may not be sufficient to address the ongoing capital needs.

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