Central Govt may recapitalise bank in second half

The Centre will draw up the final contours of state-owned banks’ recapitalisation in the second half of the current fiscal year after ascertaining how lifting the moratorium on loan repayment impacts the balance sheet of lenders. “It’s somewhat early to evaluate the recapitalisation requirements of public sector banks,” said a top government official.

The Centre will draw the final contours of state-owned banks’ recapitalisation in the second half of the current fiscal year after ascertaining how lifting of the moratorium on loan repayment impacts the balance sheet of lenders.

“It’s somewhat early to evaluate the recapitalisation requirements of public sector banks (PSBS). The moratorium imposed by the regulator is still in place. The real impact on the lenders’ books will be palpable after it ends. We will have to see how much of these loans potentially turn into non-performing assets (NPAS),” said a top government official.

The Reserve Bank of India (RBI) had in March allowed a three-month moratorium (or temporary pause) on payment of all term loans from March 1-May 31, extending the window further to August 31. Last month, RBI Governor Shaktikanta Das had said a recapitalisation plan for banks has “become necessary” and had called for lenders to raise money in advance to “build resilience” in the financial system.