There are budgetary constraints on recapitalizing Indian banks: Jaitley

September 16, 2016 4:35 AM EDT

India's Finance Minister Arun Jaitley gestures while giving his closing remarks during the "Advancing Asia: Investing for the Future" conference in New Delhi, India, March 13, 2016. REUTERS/Anindito Mukherjee


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NEW DELHI (Reuters) - Indian Finance Minister Arun Jaitley pushed back on Friday against calls to increase the allocation of funds to recapitalize state banks saddled with $120 billion in sour loans.

"Obviously banks would prefer more funds for recapitalization but there are budgetary constraints," Jaitley told a news conference after meeting bankers in New Delhi.

Jaitley has earmarked 700 billion rupees ($10.5 billion) in bank capital injections in the four years to March 2019.

Ratings agency Fitch estimates, however, that $90 billion in capital will be needed for Indian banks to meet Basel III banking rules due to be fully implemented by March 2019. Fitch says that 11 Indian banks may fail to meet those norms.

(Reporting by Douglas Busvine)



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