Capitalise PSBs, create bad bank to absorb NPAs, says financial sector

The financial sector wants the Budget to capitalise public sector banks (PSBs) to support growth and form a bad bank to take over and turn around stressed assets.

Keeping an eye on economic revival, it should set up a development finance institution to provide long-term funding for infrastructure projects.

Rating agency CARE Ratings said, given that bank credit growth would be higher in FY22 than in FY21, incremental credit would be Rs 10-11 trillion. And with a share of 60-65 per cent in banking, PSBs can see an increase in credit of Rs 6.5-7 trillion. The need for capital from the government,