Reduced NPA to drive solvency of public sector banks, says Icra

Credit rating agency Icra says reduced net non-performing assets will drive “considerable improvement” in solvency of public sector banks (PSBs). Slippages will reduce during FY20 and reach levels of 1.9-2.4%, which is acceptable. The government’s capital infusion of Rs 1.91 trillion into the PSBs during 2018 and 2019 augurs well with their growth, while the total capital requirement to support growth rate of 7-9% by these banks for FY20 would be Rs 54-77,000 crore, the rating agency said. Some banks can finance much of their capital needs through sale of non-core assets, whereas lower growth in credit in banks under prompt corrective action can reduce capital requirement for FY20.