Moody's: RBI decision to ease capital norms credit negative for banks

Moody’s Investors Service said in a report on Tuesday, The Reserve Bank of India’s decision to allow lenders more time to comply with the additional capital buffer norms under Basel 3 is credit negative for the country’s state-run banks.

Key Quotes (via Reuters):

“The decision to extend the timeline for the full implementation of Basel 3 guidelines by a year is a credit negative for Indian public sector banks.

The common equity Tier 1 ratio or core capital “over the next 12 months would be lower than what we currently expect” for some banks.

The track record of such dispensations on asset classification, when seen over the last few years in India, has shown that they have largely been unsuccessful in addressing the underlying stress.”