'Recap will need follow-up with structural changes at PSBs'
26 Oct 2017 10:39 PM IST
New Delhi: The recapitalisation programme for public sector banks is likely to boost equity market sentiment as it fuels growth recovery hopes, but should be followed up with structural changes at such banks for better results, says an UBS report.
According to the global financial services major, though the recapitalisation amount may create a supportive environment for growth, it may not drive growth by itself.
The government on October 24 unveiled a Rs 2.11-lakh crore two-year road map to strengthen NPA-hit public sector banks, which includes re-capitalisation bonds, budgetary support, and equity dilution.
"We think this capital infusion can ease Ind AS adoption for state-owned-enterprise (SOE) banks and accelerate non- performing loan (NPL) clean-up," UBS said in the research note.
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