Categories: Business

BofA says PSB NPA could go up to 4 per cent due to lockdown

Lockdown impact

new Delhi. Due to the impact of the Kovid-19 epidemic, the NPAs of public sector banks may increase by two to four percent. If this happens, it may increase the pressure on the government to recapitalize Rs 1.14 lakh in banks in 2020-21. A foreign brokerage company said this on Tuesday.

Analysts at Bank of America believe the government's consolidated fiscal deficit target could rise to two percent due to a sharp reduction in spending on incentive measures, lower tax receipts and disinvestment. In such a situation, the government will have to find new ways to raise resources to infuse more capital into banks. The government can issue a recapitalization bond for this or it can be resorted to Reserve Bank of Reserve Bank of $ 127 billion. This reserve fund of the Reserve Bank may also be reduced in providing necessary capital to public sector banks. There is a general consensus among analysts that the gross non-performing amount of banks will increase due to the corona virus epidemic. The brokerage company said that with a two to four percent increase in NPAs, the government would need seven to 15 billion dollars to strengthen the banks' capital base. That is, about Rs 525 billion to Rs 1,125 billion will be needed. The brokerage company has said that recapitalization bonds, however, may be an option. This instrument has been used in the past and banks have benefited from it.

This post was published on May 6, 2020 4:00 am

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