Capital needs of Indian banks enough to drive growth: S&P

These also meet Basel III terms.

Indian banks have sizable capital needs to support growth and meet Basel III requirements, the report noted.

According to a release from Standard & Poor's Ratings Services, the low capitalization of some rated public-sector banks is likely to constrain growth of Indian banks.

However, the increase in equity valuations for banks following the recent stock market rally will help some of these banks to raise equity and meet near term capital requirements.

The release also noted that Standard & Poor's negative outlook on Indian banks reflects the negative outlook on the sovereign credit rating on India (unsolicited rating BBB-/Negative/A-3).

It also believes that the stand-alone credit profiles and ratings on some Indian banks are sensitive to deterioration in their asset quality and erosion in capital and earnings.