Indian banking system won't recover until 2015: S&P

Banks will need significant amounts of capital to meet Basel III norms.

According to Standard & Poor's, the troubles for the Indian banking system are likely to increase in the next 12 months due to slow economic growth and sluggish fiscal reforms. However, the situation is likely to improve in the fiscal year ending March 31, 2015.

"The performance of the Indian economy and the corporate sector are likely to start improving in fiscal 2014."

Standard & Poor's assumes that the government will be able to carry forward its recent reform initiatives, which could improve operating conditions for the corporate sector. The benefits of these measures could also flow into the banking sector with a lag.

"While access to funding remains a strength for Indian banks, they are likely to need significant amounts of capital to meet Basel III norms."