In the announcement made by the finance minister Nirmala Sitharaman in her speech on Friday, she stated that public sector banks will be provided with a capital boost of Rs 70,000 crore.
According to analysts, recapitalisation announcement would pave the way for the merger of some of PSBs, help lift domestic credit growth to 12-13 per cent and also enabling banks to meet enhanced regulatory capital requirements.
“Assuming a 12-13 per cent credit growth in FY20 with credit risk-weighted assets of 70%, PSBs may be requiring around Rs 50,000 crore growth capital in FY20. However, the same also depends upon some major variables i.e. alternate long term investor, recoveries from NCLT, investment environment, out of NCLT settlements/auctions, treasury gains/loss, MTM provisioning of investments, additional or provision write-back,” the bank had said.