August 17, 2015

Indradhanush could be game changer for banks: Crisil

As per Crisil, the plan to provide a clear roadmap on capital infusion by the government and maintaining a capital buffer beyond the regulatory minimum reinforces the rating agency stance that the credit ratings of public sector banks would remain in the 'high safety' category in the near term.

The government on Friday had said it would infuse Rs 20,088 crore into 13 PSU banks within a month's time with country's largest lender SBI cornering a hefty Rs 5,531 crore.

"The proposals can help public sector banks effectively deal with the malaise of NPAs (non-performing assets), and potentially grow faster than our earlier estimate of 12 per cent annually till fiscal 2019," Crisil said in a statement.

The agency said Indradhanush makes a realistic assessment of the capital needs of public sector banks, but it is highly dependent on the market for raising the money.

"This means banks would have to gain the market's confidence by materially improving performance, which in turn, will be a slow, multi-year process," it added.

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