MUMBAI: State-run banks need to space out their plans to raise funds and avoid crowding the markets, RBI Deputy Governor R Gandhi said today, even as he welcomed the government's move to allocate additional Rs 12,000 crore to the PSU lenders.
"Every additional capital investment is always welcome," he told reporters on the sidelines of an event organised by the National Institute of Securities Markets here.
He was commenting on reports of the government promising an additional Rs 12,000 crore this year for state-owned banks with high bad loans beyond the budgetary allocation of Rs 7,940 crore earlier.
Gandhi said there is a need for banks to shore up their capital in view of the migration to the capital-intensive Basel-III framework over the next four years and added that there are many ways to do so.
The state-owned banks alone would need an additional Rs 2.5 lakh crore to meet the Basel III norms by March 2019.
On raising money from the markets, which is one of those routes, Gandhi said banks should avoid bunching up of issuances.
"What we're telling the banks is that all of them should not come together. There should be a sequencing of the timing.These are the strategies they can adopt," he said. Gandhi acknowledged that banks are waiting for the right time to hit the markets which will be primarily driven by the pricing targets.
When asked about consolidation, wherein weaker banks would merge with larger ones, he said suggestions of such moves are always on, but pointed to a decision at the bankers' retreat held this year, where it was decided that commercial considerations and not regulatory diktats, will drive such moves.
On bad assets, he said there is a need for early reporting and management. RBI will be looking at Q1 results to assess the progress.
As of the March quarter, NPAs and recast loans put together touched the 10.30 per cent mark and RBI is worried that it may cross 10.50 per cent by March.
Gandhi said work on sifting through the applications of both payments banks and small finance banks is on parallely, but refused to disclose which of the two licences will be awarded first.
Governor Raghuram Rajan had earlier said either of the two 'differentiated banks' would be announced by August.
Over 100 companies/individuals have applied for entering differentiated banking when the regulator invited applications for the same.