BASE II NORMS TO REDUCE BANK’S CAPITAL ADEQUACY 1%

Banks will have to engage in a massive equity raising exercise in a couple of years to meet the Base II norms that comes into force in March 09. According to Reserve Bank of India, banks will see loan
percentage point being knocked off from their capital adequacy ratio on account of the new guidelines. Preliminary analysis indicates that the combined capital adequacy ratio of select banks is expected to come down by about 100 basis points when these banks apply Base II norms.