According to a recent press report State Bank of India (SBI) has said that it has de-risked its Rs. 30,000 crore export credit portfolio by entering into a tie-up with Export Credit Guarantee Corporation (ECGC) in order to meet the Basel-III norms.
Mr. Pratip Chaudhuri, Chairman , SBI told the press that the bank has joined the ECGC scheme wherein its export credit defaults will be guaranteed by ECGC and capital requirement for this portfolio shall drop by 80 per cent.
Reports said that the bank had a tie up tie-up with ECGC in the year 2003 but it had discontinued the tie up since it felt that it was not very useful for them. Now the bank has again signed the MoU as the Basel III norms were coming up and that the insurance of export credit portfolio for the bank has become necessary.
Mr. Pratip Chaudhuri said that the weightage for this portfolio at present is hundred percent, so by going with ECGC it will drop to 20 per cent. He also said that the capital comes to banks from sources like banks internal accruals which he supposed to be healthy for the bank.
Reports said that the Reserve Bank of India has stated that banks will have to be recapitalized to help them achieve Basel III capital adequacy norms and it would issue a detailed guideline on the matter by December-end.
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