Bank recapitalisation: Rating downgrades arrested but upgrade is long haul

Focus shifts to board governance, performance improvement. Rethink on public offering in Fy18

The capital injection and steps for improving governance for public sector banks may have arrested downgrading of rating and outlook. But it will take a while for upgrades as that hinges on improvement in performance, governance and credit profile.  

Now the focus shifts to the execution of turnaround plan, especially for those banks that are under Prompt Corrective Action (PCA) plan under Reserve Bank of India supervision. The onus on accountability falls on directors as new metrics put pressure on banks and their boards to perform so that a similar crisis does not repeat.

Also, with sizable chunk of