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Ease capital requirements for banks: House panel
Why is it in the news ?
- A parliamentary panel asked the central bank to ease its rules on capital requirements for banks so that they can increase lending.
- The standing committee on finance also asked the RBI to evaluate the efficacy of its own guidelines on dealing with frauds.
More in the news
- The panel has asked the Reserve Bank to review supervisory framework PCA, and urged the government to set up a committee to look into issues concerning accountability of the central bank as a regulator.
- The report comes after the government have put pressure on the central bank to relax capital requirements for banks as they seek to boost credit and economic growth.
- The report also questioned RBI's decision to keep capital adequacy norms higher than prescribed under global framework of Basel III.
- Indian banks are required to maintain a minimum capital to risk weighted asset ratio (CRAR) at 9%, against the global Basel-III requirement of 8%.
- The lawmakers said the central bank has restricted lending capacity of banks and increased the burden on the government for recapitalisation of PSBs.
- However, the ratings agencies have warned against dilution of capital norms for banks.
Source
The Hindu.