Banks may extra $50 bn equity under Basel III: Fitch

Mumbai: Banks may need to raise up to $50 billion of additional equity under the Basel III capital regulations announced by the Reserve Bank of India, Fitch Ratings said on Friday.

More than three-quarters of this extra funding would need to be added between the fiscal years 2015/16 and 2017/18, the ratings agency said in a statement.

[caption id=“attachment_298519” align=“alignleft” width=“380” caption=“Lenders have to maintain Tier I capital, or core capital.Reuters”]  [/caption]

Lenders have to maintain Tier I capital, or core capital, of at least 7 percent of their risk weighted assets on an ongoing basis, the RBI said in its final guidelines on Basel III capital regulations on Wednesday, from 6 percent currently.

The guidelines are effective from 1 January 2013 in a phased manner over five years.

The new regulations could lead to an equity dilution in banks of roughly $30 billion to $35 billion over the next five years, Macquarie said.

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Reuters