PSBs to need Rs 50,000 cr more recapitalisation

New Delhi: Public sector banks (PSBs) would require another Rs 50,000 crore fund infusion in 2019-20 to help enable credit growth of 11 per cent, SBI said in a report Tuesday. 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.

"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," SBI said in its Ecowrap report.

Recently, RBI deferred the implementation of the last tranche of 0.625 per cent of CCB from March 31, 2019, to March 31, 2020. This one year window has afforded an opportunity to PSBs by an estimated relief of Rs 35,000-38,000 crore.

"Assuming an 11 per cent credit growth in FY20 with credit risk weighted assets of 70 per cent (RWAs to Gross Advances ratio declined from 80.26 per cent in Sep-17 to 71.20 per cent in Sep-18), PSBs may be requiring around Rs 50,000 crore growth capital in FY20," it said.