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India's RBI eases rules on what lenders can count as Basel III capital

[MUMBAI] India's central bank said on Tuesday it would ease rules on what lenders can count towards their core capital requirements under upcoming Basel III rules, in moves intended to ease pressure on the cash-constrained sector.

India's government had estimated last year that lenders would need to raise about US$17 billion from markets over four years to meet total funding requirements of about US$28 billion beyond projected profits.

In a bid to ease those fundraising pressures, the Reserve Bank of India (RBI) said lenders can now apply gains from revaluation of property to core capital requirements under certain conditions.

The RBI also said conversions of foreign currency in financial statements can now more easily be considered common equity capital, while also easing rules on counting deferred tax assets.

The moves could free up an estimated US$4.42-US$5.16 billion for state-owned lenders and US$737 million for private sector lenders, according to estimates by policy makers.

Reserve Bank of India Governor Raghuram Rajan said in January the central bank was working on identifying undervalued assets and other types of capital that could be counted as capital under Basel III requirements.


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