Banking sector to stabilise post liquidity crunch; asset quality to improve

Private banks still preferred. Additional capital infusion by the government might help in meeting the regulatory norms or cleaning up the book but growth capital still is needed for PSBs

The January-March quarter of financial year 2018-19 (FY19) is expected to bring in some stability to the troubled banking sector, reeling under mounting bad loans and liquidity crunch, as the latter has improved along with the Reserve Bank of India (RBI) cutting rate in the February and April 2019 policy meeting by 25 bps each. RBI has been regularly injecting liquidity in the system and even Non-Banking Financial Companies (NBFCs) have also got enough line of credit to do business. The series of Non-Convertible Debentures (NCDs) and Commercial Papers (CPs) raised by NBFC exhibits the improved liquidity in the systems.