RBI braces for Basel battle on state debt

Mumbai

THE Reserve Bank of India (RBI) is getting ready for a fight on proposed changes to the global regulatory framework that would hit the country's lenders with higher capital charges for the mountain of government debt on their books.

Tighter rules would bite India's banks, already struggling with surging bad loans and higher provisions. With nearly 30 per cent of their assets in state debt, India's lenders would take a hit if the Basel Committee on Banking Supervision raised capital requirements on sovereign bonds.

"There is a proposal to impose capital r…