BofA Securities pegs PSBs recap requirement at Rs 52,990 cr - Rs 113,550 cr

BofA Securities believes one way to fund the requirement is via recapitalisation bonds.

Public sector banks (PSBs) will need between Rs 52,990 crore to Rs 113,550 crore ($7 billion – $15 billion) in recapitalisation going ahead, which can be funded by the government despite the limited fiscal room, suggests a report from BofA Securities. The brokerage suggests the government issues recapitalisation bonds and/or utilise Reserve Bank of India’s (RBI’s) revaluation reserves.

“Our bank analysts estimate that NPLs will likely go up by 2-4 per cent of credit. This will result in a recapitalisation requirement of $7-15 billion for PSU banks. This assumes a 10-11 per cent common equity tier 1 (CET 1) target at