It is being claimed by the Financial Policy Committee that banks have not been building sufficient capital.
As per the report findings, the FPC says that banks have shown improvement in the same by adopting varied methods such as reducing dividends, pay and share buy-backs though. These are still failing to reach an appropriate level.
The report has found that the FPC was set up last year with a purpose of locating risks that affect building up of the financial system.
However, the committee has not suggested any strategies to raise funds. It has not even revealed how much money should be built by banks in order to ensure a stable banking system. But, the group continuously forces banks to raise external capital sooner as possible, the report says.
While on the one hand, the FPC doubts banks' capital raising capability, as the banking industry shockingly calls it `barking mad'. It is being said by one of the analysts that further growth in capital could hinder business and growth.
"UK banks have already done a great deal in order to recapitalize and are already well placed to withstand future crises. They have already restructured and raised additional capital and are well on the way to meeting Basel III requirements", said the British Bankers' Association.