New norms to set up private banks shortly

Mumbai, DEC. 20. The Reserve Bank of India will shortly announce new norms for setting up of private sector banks, the RBI Deputy Governor, Mr. S. P. Talwar, said today.

``These guidelines will be issued shortly and with it a norm for old private sector banks to attain the necessary net worth requirement will be provided,'' Mr. Talwar told newspersons after inaugurating Punjab National Bank's corporate branch here.On the new private sector banks meeting the norm of bringing down promoters holding to 40 per cent by the end of this fiscal, he said ``they must do it.

The RBI is talking to them and any extension will be decided on a 'case-to-case' basis.''Referring to strengthening the three weak banks - Indian Bank, Uco Bank and United Bank of India - he said, ``The issue is with the Government for recapitalisation of these banks.''

When asked about Standard & Poor's and Crisil's report stating that NPA loan levels for Indian banks would be higher at 20-25 per cent than those reported, he said, ``The banks' annual statement reflect the true nature of bad assets. We have no reason to doubt the integrity of auditors.''

The two rating agencies had said that India's scheduled commercial banks would require $11-13 billion in new capital to support losses embedded in impaired assets. Mr. Talwar said most banks had a comfortable capital adequacy ratio of 10-12 per cent as against the required nine per cent.``The RBI is examining the proposal to raise CAR to 10 per cent, however, no specific timeframe is before us,'' he added.

- PTI

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