India Ratings sees banks stable in 2013

Jan 23 2013, 05:14 IST
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SummaryIndia Ratings today gave a "stable" outlook for the country's banking sector, but said lenders may face funding issues which will make passing on of lower interest rates untenable.

fund around USD 45 billion needed over the next five years, he said.

The government, which will have to bear around 43 per cent of the total capital infusion at the current shareholding levels of over 51 per cent, will have to plan its infusions meticulously to avoid large demand towards the latter part of the period, he cautioned.

The Basel-III guidelines are positive from the rating perspective, but providing additional capital will hurt investors' interests as the return on equity will go down, hence making a case for the consolidation of small and weaker banks with the bigger ones, he said.

The BSE's sectoral Bankex shed 0.58 per cent to close at 14,435 points as against the 0.60 per cent drop in the Sensex, the 30-share benchmark, at the end of trade today.

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