BANKS MAY NEED TO RAISE $20 BN OVER 12 MONTHS

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.”