Capital allocation for lenders in budget is credit negative: Moody's

Government's allocation of Rs 11,200 crore for capital injection into state-run banks is credit negative as it is much smaller than estimated requirements, Moody's Investors Service said.

The rating agency, in a report dated Thursday, said it estimates lenders would need Rs 25,000-36,000 crore to meet a minimum Tier 1 ratio of 8% in the fiscal year ending March 2015.

"Indian public-sector banks' need for significant external capital is a result of an increase in non-performing loans (NPLs) owing to the country's slowing economy and infrastructure bottlenecks, and profitability that is insufficient for internal capital generation to fund loan growth," it said.

Last Monday, the government unveiled its interim budget for the fiscal year starting in April, allocating Rs 11,200 crore for capital injection into public-sector banks.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Tighter disclosure norms will help public shareholders

    The Securities and Exchange Board of India (Sebi) has proposed changes in listing agreements between companies and stock exchanges, laying down manage

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Nigavekar

Why UGC must focus on quality

In a vast country like India, where there are pressures ...

Rajgopal Nidamboor

The sum total of our conscious experience

All of us epitomise a multiplicity of conscious thoughts. This ...

Gautam Gupta

Don’t let success kill the essence of the concept

In 1999 when my mother started her own label, we ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture