New Delhi: Public sector banks (PSBs) will not receive any capital injections from the federal government during this fiscal year (FY23). This will take place for the first time since FY08, claims a Financial Express (FE) report.
The report cites the PSBs’ strong profitability in FY22 and the bad loan ratio’s consistent improvement as the causes behind this. There aren’t any PSBs under rapid corrective action right now (PCA).
“PSBs’ capital adequacy remains sound this fiscal. No PSB is under the prompt corrective action regime anymore. Also, given their improved financials, they are in a position to raise capital from the markets themselves. So, there are very remote chances of recapitalisation (this fiscal),” an official told FE.
In Budget 2022, the Center did not set aside any money for the recapitalization of PSBs. The study indicated that the funds could instead be distributed by authorising supplemental demands.
The government allocated Rs 3.3 trillion to the PSBs between FY16 and FY21. The banks’ balance sheets and capital-to-risk-weighted assets ratio have both improved as a result (CRAR). As of March 2022, the CRAR of PSBs was 14.6% compared to the required 10.87%.
In March 2022, the bad loan rate fell to a six-year low of 7.6%, while in August, non-food credit growth was noted at 16%. In August 2021, this was 6.7%.
Additionally, the banks reported a total profit of Rs 15,306 crore in Q1FY23, representing an increase of nearly 9%.
