The government’s recapitalisation programme may give them a back-stop facility in case of capital support
The debt restructuring scheme
is expected to soften the blow of the Covid-19 pandemic on books of public sector banks
(PSBs). With years of capital infusion, consolidation and enhancement in monitoring risk management, PSBs are relatively better placed to face challenges.
Yet, some of them are likely to need some capital support from the government, in order to absorb shocks, meet regulatory norms, and support business growth. Except for a few, most PSBs face major challenges in raising capital from the market, given the low premium.
The government’s recapitalisation programme may give them a back-stop facility in case of capital support.