The Indian banks are not prepared to implement the stringent Basel-II norms including that of capital adequacy and non-performing assets in toto by 2006, according to the Federation of Indian Chambers of Commerce and Industry survey.

The banking system has a long way to go for providing full market access to foreign players, Amit Mitra, secretary general, Ficci, said quoting the survey released in Mumbai on Tuesday.

More than half the respondents felt banks would require two years beyond 2006 to meet the Basel norms and an overwhelming 87 per cent of respondents maintained that the provision for capital changes to address operational risks would put pressure on capital adequacy requirements.

Similarly, the provisioning would adversely affect the credit flow to industry, as banks would become more risk averse, Mitra said referring to the survey findings.

The survey covered 216 key decision makers from foreign, private, public sector banks and corporates.

The internal rating based on recommendations of Basel II norms would make Indian banks more resilient to risk and help them face competition better, the survey said.

On access to foreign players to Indian banking market, the survey said the banking industry would need 2-3 years to gear up to meet challenges of full market access to overseas entities.

The Ficci survey said about 56 per cent of respondents favoured lifting restrictions on branch expansion, while 52 per cent sought removal of discriminatory limitations on foreign equity.

However, 82 per cent have welcomed the government's move to hike foreign direct investment limit in private sector banks, helping to consolidate the industry, it said.