Global rating agency Fitch has said that the private banks are in the better position in order to take advantage of the economic recovery. Fitch further stated that “The recovering GDP growth outlook is a positive and should bode well for the sector, and large private banks are distinctly better placed in leveraging a rebounding economy.” However, the rating agency said that the government’s proposed $1 billion capital infusion in public sector banks may be inadequate to support growth and achieve capital requirements under the new Basel-III norms.
Besides, Fitch stated that the credit growth of banking sector may moderate further in the current financial year as worsening asset quality coupled with capital constraints were acting as impediment. The agency also estimated that the banks would require around $140 billion in total capital to ensure full implementation of Basel III norms by financial year 2019. Fitch expects the banking sectors’ stressed assets ratio to improve marginally in financial year 2016, from 11.1 per cent in FY15, though there is still some time before a reversal in absolute non-performing loans.
As per the Reserve Bank of India (RBI) data, bank credit grew 9.7 per cent on a year-on-year basis till middle of November as compared be 10.5 per cent during the same period of the previous year.