The bank recapitalisation of Rs 70,000 crore appears to be positive as it will not only address regulatory capital requirements but also the growth capital. In our view, with this capital infusion, all the PSBs should be able to exit the PCA framework and also facilitate the merger among PSBs. Further, in our view, the dependence on banks for raising capital from market sources also stands substantially reduced and the credit growth of 12-13% is assured, even if PSBs are unable to raise capital from markets.
The author is Vice President & Sector Head - Financial Sector Ratings at ICRA Ltd
(Published 05 July 2019, 14:17 IST)
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