FinMin seeks details on fund requirements from banks

The Finance Ministry has asked state-run banks to report their immediate capital fund requirements, if any, following Moody's downgrade of country's largest lender State Bank of India.

"We have asked the banks if they are feeling any immediate stress on funds so that corrective measures, if required, could be taken at the earliest," an official in the ministry said.

The government proposes to provide a sum of Rs 6,000 crore (Rs 60 billion) to enable public sector banks to maintain a minimum Tier I Capital to Risk Weighted Asset Ratio at eight per cent this fiscal.

Last year, the capital infusion budget was Rs 20,157 crore (Rs 201.57 billion).

Earlier this week, Moody's downgraded SBI's financial strength rating by one notch to 'D+' due to low tier-I

capital ratio and worsening asset quality. The downgrading is likely to make overseas borrowings costlier for the state-owned lender.

At the end of June quarter, SBI reported a tier-I capital ratio of 7.60 per cent, against the suggested level of eight per cent termed as desirable by the government for public sector banks.

While Reserve Bank as a regulator carries out internal ratings of all PSU banks, rating agencies like Standard and Poor's, Moody's and Fitch too rate them on various parameters, such as capital adequacy and non-performing assets.

"We already have both the internal and external ratings of all the banks. We do not need to panic because of any sudden downgrade," the official said.

There are 26 public sector banks, including SBI and its subsidiaries.