INSUBCONTINENT EXCLUSIVE:
Capital buffers at six state-run banks slid below the minimum prescribed by regulators, Fitch said.
MUMBAI: Losses by state-run banks have almost entirely wiped out the $13-billion
capital infusion by the government, and the situation is unlikely to improve in the current fiscal year, ratings agency Fitch said today
The big losses will pressure the banks' viability ratings as well, it warned
"Cumulative losses at the state banks were large enough to wipe out almost all of the government's capital injections of $13 billion in
FY18, and weak performance is likely to continue in the coming year," it said.The poor results are due to revision in the non-performing
assets (NPA) recognition which is accelerating bad loan recognition, it said, adding that the February 12 revision is part of a clean-up
state-run lenders to 4.3 per cent in FY18, from 2.5 per cent in the year-ago period, while NPAs for the overall banking sector rose faster
fiscal, including country's largest lender SBI, while the otherwise resilient private sector banks were also not immune, with Axis Bank
Bank, slid below the minimum prescribed by the regulators, it said, adding that they will have to meet the 8 per cent requirement by end of
The $11-billion in capital committed by the government for FY19 will help banks avoid breaching regulatory triggers, but more government
that the list of state-run banks placed under the RBI's prompt corrective action (PCA) framework that focuses on strengthening quality
insolvency and bankruptcy code can also release capital for the banks, but there is the risk of legal delays on this front, it said
The agency also said that funding for the state-run banks has been "very stable" as depositors and senior creditors have confidence that
government support will be forthcoming as required.(Except for the headline, this story has not been edited by TheIndianSubcontinent staff
and is published from a syndicated feed.)
