Some Indian banks risk skipping coupon payments - Fitch Ratings | Reuters

MUMBAI Some Indian banks are at risk of skipping coupon payments on their capital instruments despite recent easing of rules by the central bank and capital injection by the government into state-run lenders, Fitch Ratings said on Thursday.Mid-sized banks are the most at risk of breaching capital triggers, the agency said. A Fitch analysis showed total capital adequacy ratio of 12 banks was at or below the minimum 11.5 percent required by the year to March 2019 to enable coupon payments on both legacy and Basel III additional tier 1 (AT1) capital instruments

Reuters March 09, 2017 22:03:19 IST
Some Indian banks risk skipping coupon payments - Fitch Ratings
| Reuters

Some Indian banks risk skipping coupon payments  Fitch Ratings
 Reuters

MUMBAI Some Indian banks are at risk of skipping coupon payments on their capital instruments despite recent easing of rules by the central bank and capital injection by the government into state-run lenders, Fitch Ratings said on Thursday.Mid-sized banks are the most at risk of breaching capital triggers, the agency said. A Fitch analysis showed total capital adequacy ratio of 12 banks was at or below the minimum 11.5 percent required by the year to March 2019 to enable coupon payments on both legacy and Basel III additional tier 1 (AT1) capital instruments.

There are 11 banks with common equity tier 1 (CET1) ratios at or below the minimum 8 percent that will be needed by March 2019 to make coupon payments on the AT1 instruments, Fitch said.

The Reserve Bank of India last month allowed banks to make AT1 coupon payments from statutory reserves, a move analysts said was aimed at easing pressure on banks to service coupon on the bonds.

India's banks have been burdened by a surge in bad loans and falling profit, increasing their capital needs. About two dozen state-run lenders, which dominate the country's banking sector, account for bulk of the bad loans and their capital position is weaker than their private-sector rivals.Fitch previously estimated that the sector would need about $90 billion new capital by March 2019 to meet the global Basel III rules. (Reporting by Devidutta Tripathy; Editing by Gopakumar Warrier)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.