Fitch India affiliate sees banks’ core capital needs at $13.6 billion by March 2019

MUMBAI India’s banks will need 910 billion rupees ($ 13.6 billion) in Tier-1 capital until March 2019 to grow at a bare minimum pace of 8 to 9 percent on average, India Ratings and Research said on Wednesday.

Of the total capital needs, 500 billion rupees will have to come from additional Tier-1 bonds, the rating agency, an affiliate of Fitch, said.

The Indian government, which owns majority in nearly two dozens lenders, has plans to inject 200 billion rupees into those banks over the next two financial years beginning April.

Analysts have said the government will have to increase the capital injection significantly to keep some weak banks afloat as global Basel III banking rules are due to be fully implemented by March 2019.

India Ratings “believes there is an increasing divide between the large and smaller (state-run banks), with the former having some access to growth capital, better market valuation, and also some non-core assets to divest while the latter would only receive bailout capital if required,” the agency said.