Banks need to be recapitalised as moratorium ends on Aug 31: SBI report

Banks have to improve governance and sharpen their risk management skills, says research report.

State-owned banks need to be recapitalised or given the alternative of capital conservation as one-year suspension under insolvency and bankruptcy code (IBC) provisions will affect the resolution of stressed accounts, says an SBI research report.

It said while raising capital is important for banks, capital conservation will also be crucial as the moratorium ends on August 31 and banks will start recognising stress.

The problem is given the one-year freeze in IBC, resolution cannot happen at the same time and it is thus imperative that public-sector banks (PSBs) are either recapitalised or given the alternative of capital conservation, as it