Finance Minister Pranab Mukherjee on Saturday has estimated that India's asset quality might be influenced due to lower Gross Domestic Product (GDP) growth rate, which the Finance Minister had pegged at 6.9% for fiscal year (FY) 2012-13 in the budget proposal.
He was speaking at a Banking conference held by Indian Merchants' Chamber in Mumbai.
"At the current juncture, there are some new challenges in the banking sector that merits the attention of the policymaker. In the past three years, since 2008, we have seen global turmoil hurting the stability of the financial system. The GDP is likely to grow at 6.9% for the year. The fiscal deficit is likely to fall from 5.9% to 5.1% in the current fiscal year as announced in Budget," says Mukherjee.
He also emphasised on the need of sound banking system, inclusive of robust liquidity management, settlement and payment system and risk managing ability.
"Additional capital has to be raised to meet the requirement of BASEL-III. The government is committed to ensure capital infusion in the public sector banks," says FM.
Currently, Indian banks' minimum capital adequacy ratio under BASEL-II is 8%.
In Union Budget 2012, the Finance Minister had announced a capital support of Rs 15,880 crore to all public sector banks for the fiscal year 2012-13.
Moreover, the FM advocated cause of financial inclusion to bring in more under banking and non-banking areas under the banking sector.
--With Agencies Input--
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