Letter to BS: Diluting capital adequacy norms in banks imprudent

This refers to “Don’t ignore risk” (August 10). I agree that diluting capital adequacy norms for Indian banks is imprudent. The government's endeavour to pressurise the Reserve Bank of India (RBI) to lower the capital adequacy norms amounts to shifting the goal post in a football field to facilitate a weak and losing team to score a goal. The decision of the RBI to keep the Common Equity Tier of capital adequacy for banks at 5.5 per cent rather than at 4.5 per cent was a wise decision based on the shrewd understanding of the banking system and its problems. 

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