BANKS MAY NEED TO RAISE $20 BN OVER 12 MONTHS

Hindustan Times (Jalandhar) - - HTBUSINESS -

MUMBAI: In­dian banks may need to raise $20 bil­lion in ad­di­tional cap­i­tal for in­creased pro­vi­sion­ing over the next 12 months as credit qual­ity weak­ens, Credit Suisse said in a re­port on Wed­nes­day. The in­vest­ment bank said it ex­pects pri­vate sec­tor banks to raise $7 bil­lion in cap­i­tal, while pub­lic sec­tor banks may re­quire $13 bil­lion worth of re­cap­i­tal­i­sa­tion. “We raise our credit cost es­ti­mates by 20-60% given the lock­down ex­ten­sions and unim­pres­sive fis­cal stim­u­lus. Pri­vate banks tier-1 is healthy at 13%, and cou­pled with strong pre-pro­vi­sion­ing prof­itabil­ity, ad­e­quate to ab­sorb up to 4% ad­di­tional credit costs,” said Ashish Gupta, head of eq­uity re­search at Credit Suisse. “We ex­pect them to shore up cap­i­tal buf­fers and es­ti­mate $20 bil­lion in cap­i­tal-rais­ing by In­dian banks in the next 12 months.”

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