InvestorQ : How much additional capital will Indian banks require as a result of COVID-19?
Anamika Sodhani made post

How much additional capital will Indian banks require as a result of COVID-19?

Answer
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5 months ago


According to a note by Credit Suisse, Indian banks are expected to shore up their capital buffers by raising $20 billion. This could be on the back of slippages from loans under moratorium, asset quality concerns, rating downgrades and rising refinancing risks. A 20% slippage from loans under moratorium is likely to push common equity tier 1 (CET-1) capital ratio to below the base requirement. In addition, nearly 30% of corporate loans are rated BBB & below while 30% loans are under moratorium till August 31. Both PSU banks and private banks will need to urgently shore up their capital. While private banks will target 12% CET-1, the PSU banks are likely to target 9% CET-1.