Banks at 'poverty line' of capital will stay poor: RBI executive director

The 12-minute speech by Sudarshan Sen focused on why all banks, not merely internationally active ones, should maintain a higher minimum capital than what is prescribed under the Basel framework

Public sector banks (PSBs) need to maintain the minimum regulatory capital despite sovereign backing in a bid to avoid losing market credibility and keeping off a moral hazard, and for a level-playing field, Reserve Bank of India (RBI) Executive Director Sudarshan Sen said on Thursday.

“I am sure you will agree that when the going gets tough, it’s the banks with capital that will get going, and those without it will be punished by their ecosystem,” Sen said, while delivering the keynote address at the Business Standard Annual Banking Forum 2018 held here.

Sen was referring to an argument that