MUMBAI: India will ensure that all its state-run lenders meet their minimum capital requirements as mandated by the country's central bank, a top government official said on Wednesday.
Most state banks have posted big losses in the quarter to March as bad loans surged after the central bank eliminated half a dozen loan restructuring schemes to hasten the clean-up of near-record levels of bad debt in February.
"When you do the cleaning part, a bit of dust, a bit of pain, is okay," India's Financial Services Secretary Rajeev Kumar told reporters, adding that he expected financials of state-run banks to improve going forward.
New Delhi will not allow lenders to default under any circumstances, Kumar said even though he maintained that the amount of capitalisation sanctioned by government for banks was sufficient.