Kolkata: The central government's move to reduce its shareholding in public sector banks to 52 percent may not meet their capital needs under new international norms, a top official said here Saturday.
"It has been reported that the central government is contemplating scaling down their holdings in public sector banks (PSB) to 52 percent. This may not be sufficient to fully meet the capital needs of the PSBs under Basel III norms, particularly since the projections are based on minimum requirements," Reserve Bank of India Deputy Governor R. Gandhi said at an event organised by Bengal Chamber of Commerce and Industries.
The RBI had earlier said it would monitor individual banks against an indicative leverage ratio of 4.5 percent until the final rules prescribed by the Basel Committee by end-2017 are released.
He also said the Pillar II assessment from the Reserve Bank of India (RBI) for supervisory review process of banks has not taken off effectively at this moment.
"The PSBs will have to chart out a clear capital raising plan over the next five years," he said.
Basel III focuses primarily on the risk of a run on banks by requiring differing levels of reserves for different forms of bank deposits and other borrowings with the central government pushing for its adoption.
