Nifty99000 100%

Sensex99000 100%

Article rating: 4.2
Article rating: 4.8
Article rating: 4.3
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.0
Article rating: 4.0
Article rating: No rating
Article rating: 3.0


’Indian banks exploring various means of recapitalisation’

Author: IANS/Thursday, September 14, 2017/Categories: Banking & Financial Services

’Indian banks exploring various means of recapitalisation’

New Delhi, Sep 14 - Recapitalisation is a major issue for state-run banks owing to the massive non-performing assets (NPAs), or bad loans, accumulated by them and they are now exploring various sources of raising capital, according to a leading public sector bank (PSB).

"Banks' capitalisation is a major issue for PSBs. We have to make high provisions, also now with the NCLT (National Company Law Tribunal) cases," UCO Bank Chief Executive R.K. Thakkar said.

The Reserve Bank of India (RBI) has identified the second batch of large accounts which have defaulted in repayment of loans and has advised banks to resolve them. 

In June, the RBI had come out with a list of 12 large accounts, which totalled about 25% of the current gross NPAs of the banking system for reference to the NCLT under the Insolvency and Bankruptcy Code (IBC).

"We are trying various source to raise capital... We have requested the government for support, but for the balance beyond the budgetary support we have to go to the market, depending on the appropriate time," Thakkar said.

He said the UCO Bank's capital requirement for the current fiscal is to the tune of Rs 3,000 crore and "with the provisioning required for the NCLT cases the requirement may go up to another Rs 500-600 crore."

The RBI has also advised banks to make higher provisions for the accounts to be referred under the IBC. 

This was intended to improve bank provision coverage ratios and to ensure that banks are fully protected against likely losses in the resolution process.

Thakkar said that he expected the first tranche of the government support to arrive to the bank in a month's time.

He also said that recapitalisation bonds would be one of the possible instruments to explore in the efforts to supplement the government recapitalisation.

The PSBs have accumulated a high ratio of NPAs, going up to 17-18% of their loan portfolio.

The government has committed Rs 70,000 crore for banks' recapitalisation over five years, of which Rs 10,000 crore remains to be disbursed for the current fiscal.

Print Rate this article:
No rating

Number of views (319)/Comments (0)

rajyashree guha


Other posts by IANS
Contact author

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free