Mumbai: While large public sector banks and private banks will be able to navigate another year of low growth, India Ratings and Research said the mid and small sized PSU banks with weak capitalisation and large stock of aging NPAs would find it difficult to grow.
Ind-Ra expects banks to require Rs 91,000 crore in tier-1 capital till March 2019 to grow at a bare minimum pace of 8-9 per cent compounded annual growth rate (CAGR). This includes the Rs 20,000 crore of residual tranches from the government of India’s Indradhanush programme.
However, Ind-Ra thinks there is an increasing divide between the large and smaller PSBs, with the former having some access to growth capital, better market valuation, and also some non-core assets to divest while the latter would only receive bailout capital if required and would need to ration their capital consumption over next two years.
