'Banks have ample time to comply with Basel III requirements'

Indian banks are within a “comfortable” range to meet Basel III requirements and will have ample time to comply with the RBI’s core capital ratio requirements, said Goldman Sachs.

Goldman says private banks are already “well above” the capital requirements, while public lenders are “close to or have crossed the core 8 percent Tier 1 hurdle.”

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However, pension liabilities would need to be adjusted to meet the RBI’s directive to adjust the shortfalls in defined pension benefits against common equity by January 2013, Goldman said. That would have an impact on net worth of about 2 to 5 percent for Indian lenders, Goldman estimates.

Banks most impacted would be Punjab National Bank ), Bank of India ( and Union Bank , which would see their net worth impacted by 4.4-4.6 percent, Goldman said in a report today.

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However, bank shares fell today after the Reserve Bank of India announced Basel III norms which aims to moderate the return on equity of banks, both public and private. With the guidelines coming into effect from January 2013, banks would have to set aside a higher percentage of their capital to meet the new norms, which in turn has a direct bearing on their profits.