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Moody’s pegs PSBs’ capital need at Rs 2 lakh crore for next 2 years: Wake-up call to government

Accordingly, PSBs' average NPL ratio under this scenario will rise more steeply to 18 percent at the end of March 2022 from 11 percent at the end of March 2020, Moody’s same

Accordingly, PSBs’ average NPL ratio under this scenario will rise more steeply to 18 percent at the end of March 2022 from 11 percent at the end of March 2020, Moody’s same.

The international rating and analysis agency same a pointy holdup in India’s economic process created worse by the coronavirus occurrence can hurt public sector banks. It should result in worsening quality quality, a pointy rise in credit prices, and so hurt their gain. This, as per Moody’s, can considerably expend their capital buffers, and government support is also needed to plug the insufficiency.

“Of the entire quantity, PSBs can want concerning Rs 100,000 large integer to create loan-loss provisions to about 70% of NPLs, which is able to leave them with enough capability to grow loans 8-10 % annually, quicker than the four % in business enterprise 2020,” it said.

“Uncertainty surrounding India’s economic recovery as well as the ongoing cleanup of balance sheets are making it difficult for most PSBs to raise equity capital from markets. This implies PSBs can still want support from the govt. To plug their capital shortfalls, and that we expect the govt. To infuse recent funds into them because it has drained the past,” the report said.