NPA Crisis

RBI unlocks Rs.40,000 crore additional capital for banks

  1. News: RBI revised norms on capital recognition, making available an additional Rs.40,000 crore to Indian banks
  2. Why? Public sector banks(PSBs) are facing pressure on their profitability due to a sharp rise in non-performing assets(NPAs), which is eroding their capital base
  3. Context: Many PSBs reported huge losses for the quarter ended Dec 2015, after the RBI asked lenders to identify several accounts as non-performing
  4. Amendments: RBI has made some amendments to the treatment of certain balance sheet items for the purposes of determining banks’ regulatory capital
  5. Basel III Standards: Review was carried out with a view to further aligning the definition of regulatory capital with the internationally adopted Basel III capital standards

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