InvestorQ : With all the COVID-19 troubles and the Moody’s downgrade, will the PSU banks get any capital infusion from the government this year?
Neelam Naik made post

With all the COVID-19 troubles and the Moody’s downgrade, will the PSU banks get any capital infusion from the government this year?

Answer
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NISHA Nayak answered.
5 months ago


The Budget 2020 had not made any provisions to recapitalize banks. However, the narrative appears to have changed with the COVID-19 and the downgrade of banks by Moody’s. Now the government has assured state-owned banks that it would provide capital support on a need basis. Government has hinted at capital infusion to the tune of Rs.25,000 crore overall during the year. In the last 5 years, the government has effectively pumped in Rs.350,000 crore into recapitalizing banks. While the banks had asked banks to find their own funding resources, it may change tack considering the pressure on their credit profiles and the bank’s access to equity capital market. Indian banks are already burdened with a bad loan pile of nearly $140 billion and the lion's share rests with the PSU banks. In August last year, India had announced a series of mergers involving 10 state-owned banks to ensure stronger balance sheets to boost lending and revive economic growth.