Capital infusion to boost PSBs' credit risk profiles: Crisil

The government's move to increase its stake in 10 public sector banks (PSBs) to 58 per cent by infusing Rs 6,000 crore will help the lenders improve their credit risk profiles, ratings agency Crisil said today.

"The government's decision to infuse additional capital of Rs 6,000 crore in public sector banks will further strengthen their credit risk profiles," the agency said in a note issued here.

The Union Cabinet had yesterday decided to infuse the additional capital to raise its holding in PSBs to a minimum of 58 per cent. Raising of stakes to 58 per cent will give banks additional headroom to raise funds from capital markets by diluting government's equity till 51 per cent.

The infusion of Rs 6,000 crore is over and above the budget announcement of infusing Rs 15,000-crore in the banks.

"(The move) will strengthen the PSBs' capitalisation levels, particularly for those banks where the ability to raise capital from the market was relatively constrained by GoI's holding—at or around 51 per cent," Crisil Rating's Director Pawan Agrawal said.

Ten banks have the state's holding at less than 58 per cent currently which include  Bank of Baroda, Oriental Bank of Commerce, Andhra Bank, Dena Bank, IDBI Bank and Vijaya Bank.