Mukherjee says slowdown may hurt banks' asset quality

Mumbai, Apr.7 (ANI): A slowdown in India's gross domestic product could impact banks' asset quality, Finance Minister Pranab Mukherjee said on Saturday.

Addressing an industrial event in Mumbai, Mukherjee said banks would have to raise additional capital to meet requirements of Basel III global banking rules.

"If GDP growth slows down, there could be some downstream impact on asset quality. At the same time, additional capital will have to be raised to meet the requirements of implementing Basel III, the needs of a growing economy and for meeting the objectives of financial inclusion," he said.

Mukherjee added that according to the Financial Stability Report for December 2011, brought out by Reserve Bank of India, the capital is adequate, barring some decline in financial soundness indicators.

"There has been some deterioration in financial soundness indicators but capital adequacy remains well above regulatory requirements and asset quality indicators continue to compare favourably with ratios in peer countries," Mukherjee said.

The Indian economy is likely to grow by 7.6 percent in fiscal 2012-13, up from 6.9 percent in the current year, which is the lowest rate recorded in nearly a decade excluding the global financial crisis in 2008, Mukherjee said last month. (ANI)