The capital requirements of India banks could be in the range of Rs 70,000-Rs 95,000 crore over the next two to three years and not the Rs 20,000 crore budgeted by the government, says global rating firm Moody’s. The firm’s India affiliate ICRA said this is in view of the fact that the banks would have to adhere to the compliance requirements under the Basel-III norms and because of their poor asset quality. ICRA said the asset quality will continue to remain weak as the pace of loan recovery remains sluggish. According to Alka Anbarasu, Moody’s vice president, the firm estimates that the 11 Moody’s-rated public sector banks will require external equity capital of about Rs 700-950 billion. Such an amount is much higher than the Rs 200 billion budgeted by the government towards capital infusion until March 2019, she added. Moody’s has estimated that gross non-performing assets will be in the range of Rs 8.2-Rs8.5 lakh crore by the end of FY18 as against Rs 7.65 lakh crore by the end of FY17.
