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India could delay implementation of global risk norms Basel III: SBI Report

Citing Indian banking sector is already under pressure due to structural reforms like demonetisation and new uniform tax regime, SBI Ecowrap in its latest report has said that India could slightly delay the implementation of global risk norms Basel III. It also said that an extended timeline to meet the capital needs under the norms would provide the necessary breather to banks to lend more while they grapple with several issues.

The report titled 'Timing Future Reforms in India' said that Indian banking sector needs some time to assimilate the impact of past three structural reforms demonetisation, Goods and Services Tax (GST) implementation and Real Estate Regulatory Authority (RERA) before facing the new ones. Even as they acknowledge the positive impact of such reforms, they are convinced that perhaps the Indian banking sector deserves a small interregnum so as to meaningfully concentrate on issues related to financial inclusion, asset quality and credit growth.

Terming banking sector as the key driver of Indian economy, the report noted that it is currently going through challenging times due to low credit growth, deterioration in asset quality and low profitability. It further said that going by the country-wise implementation status of Basel III standards, India is largely compliant with the risk-based capital and Liquidity Coverage Ratio (LCR) norms ahead of most of the countries as some of them. As per the Reserve Bank direction, the Basel III capital regulation is being implemented from April 1, 2013 in India in phases, and it will be fully adopted as on March 31, 2019.

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