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India's record bank capital boost lauded by Fitch, Moody's
India’s plan to inject an unprecedented 2.11 trillion rupees ($32 billion) into state-controlled banks will bolster their risk buffers and support the financial system, two major credit-rating companies said.
“The proposed infusion is a sizable jump over what had been pledged before as India is seeking to plug a large part of the core equity gap at the state-run banks,” said Jobin Jacob, a Mumbai-based associate director at Fitch Ratings Ltd. This addresses “weak core capitalization one of the key drivers for our negative outlook on the South Asian nation’s banking sector.”
The move is part of Prime Minister Narendra Modi’s goal to help banks meet tighter capital-reserve requirements and boost credit as slower economic growth and falling demand erode borrowers’ ability to repay loans. Soured debt is now the highest since 2000, hampering credit expansion that’s needed to spur Asia’s third-largest economy.
Moody’s Investors Service analyst Srikanth Vadlamani said the move is a “significant credit positive” for India’s state-run banks. The amount of capital pledged is enough to address the lenders’ solvency challenges and recapitalize them adequately, Vadlamani, who is vice president of the financial institutions group at the unit of Moody’s Corp., said by phone.
Read more at:
//economictimes.indiatimes.com/articleshow/61215032.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
India’s plan to inject an unprecedented 2.11 trillion rupees ($32 billion) into state-controlled banks will bolster their risk buffers and support the financial system, two major credit-rating companies said.
“The proposed infusion is a sizable jump over what had been pledged before as India is seeking to plug a large part of the core equity gap at the state-run banks,” said Jobin Jacob, a Mumbai-based associate director at Fitch Ratings Ltd. This addresses “weak core capitalization one of the key drivers for our negative outlook on the South Asian nation’s banking sector.”
The move is part of Prime Minister Narendra Modi’s goal to help banks meet tighter capital-reserve requirements and boost credit as slower economic growth and falling demand erode borrowers’ ability to repay loans. Soured debt is now the highest since 2000, hampering credit expansion that’s needed to spur Asia’s third-largest economy.
Moody’s Investors Service analyst Srikanth Vadlamani said the move is a “significant credit positive” for India’s state-run banks. The amount of capital pledged is enough to address the lenders’ solvency challenges and recapitalize them adequately, Vadlamani, who is vice president of the financial institutions group at the unit of Moody’s Corp., said by phone.
Read more at:
//economictimes.indiatimes.com/articleshow/61215032.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
