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30-Jan2019

PSBs will require fund infusion of another Rs 50,000 crore in 2019-20: SBI Report

In a bid to help enable credit growth of 11%, SBI in its 'Ecowrap' report has stated that public sector banks (PSBs) will require fund infusion of another Rs 50,000 crore in 2019-20. In December 2018, the government enhanced bank recapitalisation outlay from Rs 65,000 crore to Rs 1,06,000 crore for the current fiscal. As of December 2018, a total amount of Rs 51,513 crore has been infused into PSBs.

SBI said 'We also request that government should infuse the promised recapitalisation amount of Rs 54,487 crore (net of promised Rs 1,06,000 crore) by March 2019. This will act as a big enabler for banks. For the record, PSBs may require another Rs 50,000 crore of growth capital in FY20'. It added that this one year window has afforded an opportunity to PSBs by an estimated relief of around Rs 35,000-38,000 crore.

As per the report, assuming an 11% credit growth in FY20 with credit risk weighted assets of 70% (RWAs to Gross Advances ratio declined from 80.26% in Sep-17 to 71.20% in Sep-18), PSBs may be requiring around Rs 50,000 crore growth capital in FY20. However, it said the same also depends upon some major variables that is alternate long term investor, recoveries from NCLT, investment environment, out of NCLT settlements, MTM provisioning of investments, additional or provision write-back.



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