Journal of Emerging Trends in Economics and Management Sciences: Home

Abstract:
The paper estimates the capital requirement of Indian public sector banks till March 2019, when Basel III capital regulations are fully implemented, using certain assumptions of RWA growth. This comes out to be much larger than the estimate by Government of India (GoI) as per Indradhanush plan in August 2015. Also, this estimated requirement is greater than the amount planned to be infused by GoI till March 2019.Then, the potential of Masala Bond market is estimated by the end of this period by comparison with the Dim Sum bond market. Finally the paper establishes that the Masala bond market may be the most viable option for capital starved Indian public sector banks after exploring the inherent characteristics of all the alternatives (internal generation of equity through surplus/ common equity issuance/ domestic bond market being the other alternatives)available to Indian public sector banks for raising the estimated required capital. This research is of importance to the Indian public sector banks, the Reserve Bank of India as well as to individual banks to formulate their capital raising plans, so that the possibility of banks falling below minimum regulatory requirement can be avoided.This research will also help readers? gain greater understanding about the capital requirements of Indian PSBs and about the Masala bond market, which remains largely unexplored till now.

Keywords: basel III, masala bond, dim sum bond, capital requirement, capital conservation buffer.

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