"Going forward, the financial health of PSBs should increasingly be assessed by their ability to access capital markets rather than looking at the government as a recapitaliser of the first and last resort," the RBI said in its report on 'Trends and Progress of Banking 2018-19'.
The report said the government has been infusing capital in some PSBs, which has been just enough to meet the regulatory minimum including capital conservation buffer (CCB).
The deferment of the implementation of the last tranche of the CCB till March 31, 2020, has offered some breathing space to these banks, it said.
The lenders' capacity to sustain credit growth in consonance with the financing requirements of the economy will, however, warrant that capital is maintained well above the regulatory minimum, providing these banks confidence to assume risk and to lend, the report said.
"In this sense, recapitalisation would be a continuous process," it said. The report said raising resources through public issues or private placements has been constrained, partly due to volatile market conditions, the report said.
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