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22nd July 2016
The additional capital infusion of Rs 22,915
crore into 13 weak banks announced recently by the central government is
positive for them but the actual capital needs were much more higher, said
global credit rating agency Moody's Investors Service. The Total Investment & Insurance Solutions
In its sectoral comment on Indian public
sector banks on Friday, Moody's said as per its analysis an external capital
requirement of about Rs 1.2 trillion for the rated 11 government owned banks as
of the beginning of this fiscal far exceeds the remaining Rs 450 billion the
government budgeted for disbursal to the banks by March 2019.
"Therefore, unless the government
increases the planned amount of capital for infusion, the capital needs of
public sector banks remain significantly above the amount budgeted by the
government," Moody's said. The
Total Investment & Insurance Solutions
In August 2015, the government announced that
Rs 700 billion will be allocated to public sector banks over a four-year period
to help improve their capitalisation, Moody's said.
Of this amount, the government has already
allocated about Rs 250 billion in the fiscal year 2015. The Total Investment & Insurance Solutions
For fiscal 2016, the government has budgeted
another Rs 250 billion (from which the Rs 229 billion was disbursed) and
consequently, the remaining amount of Rs 21 billion will be allocated to the
banks at a later date, Moody's said. The
Total Investment & Insurance Solutions
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