Banks would need additional capital buffer of $20 bn, says Credit Suisse

Slippage of 20% on loans under moratorium to weigh on capital ratios

Indian banks are expected to shore up their capital buffers by raising $20 billion as domestic banks prepare for slippages from loans under moratorium, asset quality concerns, rating downgrades and rising refinancing risks, Credit Suisse said in a note.

The foreign brokerage pointed out that a 20 per cent slippage from loans under moratorium is likely to push common equity tier 1 (CET-1) ratio to below minimum or comfortable thresholds for most banks.

Further, 15-40 per cent of corporate loans are rated BBB & below and 20-40 per cent of loans are under moratorium till August 31. The stress on