NEW DELHI: The Finance Ministry asked banks to explore the possibility of hiving-off non-core businesses, including insurance and mutual funds, to raise funds to meet Basel III capital adequacy norms.

"There was a meeting of heads of seven large banks where many issues were discussed, including capital raising," Financial Services Secretary G S Sandhu said, without elaborating.

After the meeting, Bank of India Chairperson V R Iyer said there was discussion on monetisation or listing of non-core businesses such as insurance, mutual funds and credit cards to raise capital.

"We also discussed about hiving off non-core business. Different banks are in different leagues. State Bank of India can go for listing its insurance business as it is profitable," she said.

Many other banks cannot list their insurance ventures as they are yet to break even, she added.

According to sources, the possibility of asking some big borrowers to raise funds in the stock market and reduce debt was discussed.

The stock market is quite attractive at the moment and there is a possibility that some listed and non-listed companies that have borrowed heavily earlier can raise funds from the stock market and to that extent, reduce the debt, sources said.

This will help in avoiding further non-performing assets, or bad loans, because some of these borrowers are under stress, sources added.