Resources for Basel II Capital Accord (Basel II)

Inorganic growth can help banks take on competition

economictimes.indiatimes.com

The government has said there is evidence to show that consolidation in banking helps build up capital and meet foreign competition. It has also said that it is open to proposals from public sector banks (PSBs) for capital infusion against the backdrop of their huge resource requirement to meet the Basel II norms and boost their capital adequacy to growth business. This was indicated by minister for state (finance) Pawan Kumar Bansal speaking at Bancon.

Speaking on the sidelines of the seminar, Mr Bansal said, “A PSU bank has to approach us with a proposal on capital and we will consider it.” So far, only State Bank of India has approached the government with a plan to raise capital, which includes rights issue.

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