As the crimson tide turns, a capital call

Buffeted by losses and provisioning, PSBs will need a top-up on the recapitalisation plan

India’s banking system, creaking under the weight of non-performing assets (NPAs) and capital provisioning thereof — which have led to steeped-in-crimson financials — is closer to a turnaround than before, but will need to scale another capital wall to reach there. Public sector banks (PSBs) will continue to need further capital infusion from the government. And that’s notwithstanding the improvements that we expect this fiscal: lower incremental slippages to NPAs, overall peaking out of NPAs, good recoveries from accounts referred to the National Company Law Tribunal(NCLT) for resolution under the Insolvency and Bankruptcy Code (IBC) process, and stabilising pre-provision profitability