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'Capital needs of public sector banks much higher'

In August 2015, govt nnounced that Rs 700 billion will be allocated to public sector banks over a four-year period

Policy Pulse
Publish Date: Jul 22 2016 9:03AM | Updated Date: Jul 22 2016 9:08AM

'Capital needs of public sector banks much higher'

Additional capital infusion of Rs 22,915 crore into 13 weak banks announced by Centre recently is positive for them but the actual capital needs were much higher, global credit rating agency Moody's Investors Service has said.

 
In its comment on Indian public sector banks on Friday, Moody's said as per its study an external capital requirement of about Rs 1.2 trillion for the rated 11 government owned banks as of the start of this fiscal far surpasses the remaining Rs 450 billion the government budgeted for disbursal to the banks by March 2019.
 
"Therefore, unless the government increases the planned amount of capital for infusion, the capital needs of public sector banks remain significantly above the amount budgeted by the government," Moody's said.
 
In August 2015, the government announced that Rs 700 billion will be allocated to public sector banks over a four-year period to help improve their capitalisation, Moody's said.
 
Of this amount, the government has already allocated about Rs 250 billion in the fiscal year 2015.