January 18, 2017

India arrays to recapitalise its big banks

India arrays to recapitalise its big banks

India’s banks need a cash injection, and 2017 looks like the year that they will get it. The country reckons ailing state lenders need at least 1.8 trillion rupees ($27 billion) or more to shore up their balance sheets and meet global capital requirements. Now Prime Minister Narendra Modi may have a way to rally political support for such a move.

Bad loans are a real problem. Non-performing and stressed assets at state lenders already stood at almost 15 percent of total loans at the end of March, according to the Reserve Bank of India. But sceptics argue that providing banks a lifeline is a low priority for New Delhi. Any spare cash the government can find, they insist, is more likely to go to vote-winning issues in a country made up of 29 states and thus perpetually stuck in an election cycle.

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