Banks’ State Debt Pile at Stake as India Braces for Basel Battle
- Global regulators may reform rules for banks’ state debt pile
- BIS says current regulatory treatment is ‘no longer tenable’
Pedestrians walk past the Reserve Bank of India (RBI) headquarters in Mumbai, India, on Tuesday, April 5, 2016. India's central bank lowered its key interest rate for the first time in six months and said it would look for more room to ease as it watches monsoon rains.
Photographer: Dhiraj Singh/BloombergThe Reserve Bank of India is bracing for a fight on proposed changes to the global regulatory framework that would hit the country’s lenders with higher capital charges for the mountain of government debt on their books.
Tighter rules would bite India’s banks, already struggling with surging bad loans and higher provisions. With nearly 30 percent of their assets in state debt, India’s lenders would take a hit if the Basel Committee on Banking Supervision raised capital requirements on sovereign bonds.