INSUBCONTINENT EXCLUSIVE:
Last year, the government had announced a recapitalistion plan of Rs 2.11 lakh crore for PSBs.
As the country's 21 public sector banks (PSBs) announced their results for the fourth
quarter of financial year 2017-18, only two of the state-run banks -- Indian Bank and Vijaya Bank -- have posted profits
The combined losses of other 19 PSBs for the quarter stand at a staggering amount of Rs 63,117 crore, out of which the top five account for
Rs 35,627 crore led by the second-largest PSB, Punjab National Bank (PNB), which posted a loss of Rs 13,417 crore
The lowest loss was posted by Bank of Maharashtra at Rs 113 crore.Reserve Bank of India's (RBI) revision of loan restructuring schemes in
February, has led to banks increasing provisions for bad loans -- the major reason for banks posting high losses
can rescue, or atleast attempt to rescue the PSBs, which comprise 70 per cent of Indian banking system.Are mergers, privatisation the
said Kuntal Sur, partner and leader, FS risk and regulation, PwC India
"If we look at privatisation of PSBs, because of their financial health, we won't get any value and no one would be willing to pick up these
life to the ailing banking sector in general and to the PSBs in particular
of PSBs but has prevented a deterioration in their capital position despite the large losses reported by them during FY2018."He attributes
the inefficacy of NPAs to the way the capital will be raised for the PSU banks."As one-third of Rs 2.11 trillion (2.11 lakh crore) was to be
raised by PSBs through equity, after their weak results, their ability to raise capital and investor interest for their shares may be muted
also come to the rescue of state-run banks
under its PCA framework -- which restricts banks from lending, distributing dividends, and expansion of branches -- will cast a shadow on
loan disbursal, experts opine
Large banks such as IDBI Bank, Central Bank of India and Bank of India are under RBI's PCA framework and according to various reports, PNB
could be the next on the list.However, large corporate houses with strong balance sheets should not borrow from banks, which is a global
practice, and go for the bonds market where the governance is much stronger, says Mr Sur
Others can look towards private equity firms, peer-to-peer lending and fin-tech firms, he further added.The bankruptcy code launched in 2016
Bankruptcy Code help banks recoverExperts hope that the Insolvency and Bankruptcy Code (IBC), which came into effect in 2016 to fix the bad
Steel under the IBC -- banks will get Rs 35,200 crore and a 12 per cent stake in the company -- experts say, 10-15 such large cases getting
shall lead to cleaning up of bad assets for the banks during next two years, i.e
