Banks may restart lending after Rs 70,000 cr boost but with caution

A significant portion of the capital provided would be tied up in boosting core capital and provisioning against bad debts which would limit the ability of bankers to lend

With the government infusing Rs 70,000 crore upfront into public sector banks, bankers are enthused about getting back to the business of lending like earlier.

However, the credit matrix has changed, and companies are now cautious. The capital infusion will give about a Rs 5-trillion liquidity boost to the banking system. However, a significant portion of the capital would be tied up in boosting core capital and provisioning against bad debts.

The immediate demand will likely come from the auto sector, which has perked up following the stimulus. The bankers are hoping the auto push and the promise to clear