NEW DELHI: Rating agency Fitch said Indian banks will require more than $200 billion (about Rs 12 lakh crore) in fresh capital as they prepare for the full implementation of Basel III capital requirements by March 2019.

The core capital position of the Indian banking system is weaker than that of many Asian banking systems that are also migrating towards the Basel III capital norms, Fitch said in a study.

State-owned banks to account for 85 per cent of the capital requirement. As per the estimates, public sector banks require Rs 2.40 lakh crore equity capital by March 2019.

These banks account for a higher proportion of stressed assets - their stressed assets formed around 12 per cent of total system assets in 2013-14 compared with 10 per cent for the system - and have lower profitability, which have added to their capitalization pressures.

Private banks are much better positioned in terms of their capital levels and access to markets.

Stressed assets in the Indian banking system are likely to peak around 2014-15, though there will be near-term pressures due to economic slowdown and existing structural and policy- related constraints. Any improvement after that will be gradual, it said.

It may take more time for the banks to raise core equity capital because valuations have yet to recover, it added.

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