Optimism towards PSBs may not last

The private sector banks have high valuations and can raise cash to meet Basel-III norms

India’s public sector banks (PSBs) have been lurching from crisis to crisis for a decade and Non-performing assets (NPAs) have continued to mount. Banking NPAs amounted to over Rs 6 trillion (Rs 6 lakh crore) and counting by December 2016. That's approximately five per cent of GDP and roughly nine per cent of gross advances. 
 
NPAs expanded by about Rs 1 trillion in the first three quarters of 2016-17. Many PSBs are technically bankrupt with NPAs wiping out their net worth. If stressed loans (not yet accounted NPAs) are included, the outstanding bad debt rises to Rs 9.5 trillion