On a rough calculation, Indian Overseas Bank would need another Rs 9,500 crore of capital by 2017-18, to meet the capital requirements with Basel III norms, the bank's Chairman and Managing Director, Mr M. Narendra, said.
Answering a question at a press conference here today, Mr Narendra said that the figure was purely on a back-of-the-envelope calculation basis.
He said that while the number might look big, the bank would have no problem in raising the capital.
“There is enough time” he noted, adding that the retained earnings of the bank would substantially help. The bank could access the capital market too.
In another context, Mr Narendra pointed out that the Union Government has committed to ensuring that the public sector banks were adequately capitalised.
Basel III norms are ‘a global regulatory standard on bank capital adequacy agreed upon by the members of the Basel Committee on Banking Supervision'. The Reserve Bank of India wants Indian banks to follow these norms from the year 2017-18, a year ahead of the date of applicability agreed under the Basel.
The rating agency Fitch has estimated that Indian banks would need to raise $50 billion (Rs 2.5 lakh crore) of capital by 2017-18.
Another agency, ICRA, has estimated that the banks would need Rs 5 lakh crore.