As many as 14 PSBs have Rs 22,600 crore of additional Tier 1 (AT1) bonds outstanding, it said.
"A sharp decline in profitability and mounting losses could wipe out the revenue reserves of some public sector banks (PSBs) and hamper their near-term ability to service coupon on AT1 bonds issued under Basel III capital regulations, Crisil said in a statement.
While government has committed capital support to PSBs, the coupon on AT1 bonds can only be serviced through current year's profit or from revenue reserves and hence any capital infusion by government alone cannot improve the bank's ability to service coupon on these bonds.
Apart from high probability of posting losses this fiscal, negative or low revenue reserves are likely to make six PSBs vulnerable, Crisil Senior Director (Financial Sector and Structured Finance Ratings) Krishnan Sitaraman said.
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"Of these, four have AT1 bonds outstanding, where continued losses could wipe out their revenue reserves and pose a challenge when it comes to coupon servicing. The other two have not issued any AT1 bonds so far," he said.
However, their ability to continue to do so over the medium term will depend on a return to profitability, Crisil said.
On the other hand, 11 banks are expected to report a profit in the near term (or have sizeable revenue reserves despite weaker profitability), which would help them service coupon obligations on AT1 bonds over the medium term.
Crisil, however, did not name any bank in its statement.
Last year, the government had announced that it will infuse Rs 70,000 crore into the state run banks over four years, while they will have to raise a further Rs 1.1 lakh crore from the markets to meet their capital requirements in line with global risk norms Basel-III.
In July, the government announced a Rs 22,915 crore capital infusion into 13 PSBs and said more funds would be infused in future as needed.