Banks have been making equity offerings and issuances of subordinated debt for inclusion under tier-II capital under transparent and non-discretionary guidelines. A cumulative amount of capital of Rs.867 crore has been returned by public sector banks to the Government. Capital adequacy in banks and financial institutions has become a matter of considerable international attention, particularly after the Asian crisis.
The draft of a new Capital Accord, proposed for implementation in 2006, envisages increased risk sensitivity of capital ratios, refinement of measures of credit risk including a greater role for external credit rating, flexibility and national discretion rather than a one-size-fits-all approach.