Stating that public sector banks would see further deterioration in their capital ratios, global rating agency Moody’s Investor Service on Friday said the government will have to infuse Rs 1.2 lakh cr
Stating that public sector banks would see further deterioration in their capital ratios, global rating agency Moody’s Investor Service on Friday said the government will have to infuse Rs 1.2 lakh crore into state owned banks by 2020 as against Rs 45,000 crore budgeted by the government.
The rating agency said that the weak earnings outlook for India’s public sector banks highlights their high level of external capital needs and their capitalisation profiles will further deteriorate unless the government provides additional capital support.
“The bank’s asset quality will remain under pressure over the next 12 months, as they continue to recognise non-performing loans (NPLs) from some of the larger leveraged corporate groups, particularly in the steel and power sectors. As a result, elevated provisioning expenses will continue to constrain profits and limit internal capital generation,” said Alka Anbarasu, vice-president, Moody’s.
