Public Sector Banks will need capital infusion of Rs 35,000-40,000 crore: S&P

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Global rating agency Standard and Poors (S&P) on Wednesday said that public sector banks in India would need additional capital of Rs 35,000-40,000 crore in the current financial year and barring the State Bank of India and a few large PSBs, most will need capital infusion from the government and government-owned enterprises due to low market valuation.

Indian banks that have expressed an intention to raise equity include ICICI Bank (Rs 15,000 crore), Axis Bank (Rs 15,000 crore), Yes Bank (Rs 15,000 crore), State Bank of India (Rs 20,000 crore), Bank of Baroda (Rs 9,000 crore), and Punjab National Bank (Rs 7,000 crore). Some banks which recently raised large amounts of capital include Kotak Mahindra Bank(Rs 7,400 crore) and IDFC First Bank (Rs 2,000 crore).

“We believe top-tier Indian private sector banks are adequately capitalised. They are raising further capital to strengthen their balance sheets, unlike state-owned banks, which generally have only small buffers over regulatory capital,” said S&P Global Ratings’ credit analyst Michael Puli.

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