Rs 70,000-cr capital infusion in PSBs credit positive, to boost economy: S&P

The capital infusion will help some banks to come out of the central bank's prompt corrective action and resume lending and clean up their balance sheets, she added.

The proposed Rs 70,000-crore capital infusion into public sector banks (PSBs) will provide a timely booster to these lenders, S&P Global Ratings has said.

 The move, announced in the Budget, is likely to be credit positive for the banking sector and the economy, S&P said in a note titled 'India's Budget attempts to address trust deficit in the financial sector.

"We believe the capital infusion will help PSBs make necessary haircuts on their weak corporate loans and shore up their capital adequacy," said S&P Global rating credit analyst Geeta Chugh.

The capital infusion will help some banks to come out of the central bank's prompt corrective action and resume lending and clean up their balance sheets, she added.

S&P said it believe PSBs still require substantial reforms to improve risk management, service quality, efficiency, and diversity of product offerings.

FOR MORE UPDATES CONTACT US @ RIPPLES ADVISORY OR 9644405057