The government’s decision to infuse ₹11,336 crore in five public sector banks will help meet the regulatory capital requirements, rating agency Moody’s said on Wednesday.
“The infusions are credit positive and will strengthen the banks’ capitalisation.”
‘Weakest CET1 ratios’
“These banks’ common equity tier 1 (CET1) ratios were the weakest among all public-sector banks as of fiscal 2018, and were at the risk of breaching the minimum regulatory capital requirement of 5.5% under the Basel III norms,” Moody’s said. The banks that would receive the funds are Allahabad Bank, Andhra Bank, Corporation Bank, Indian Overseas Bank and Punjab National Bank. “The infused capital is 0.6%-2.0% of the banks’ risk-weighted assets (RWAs) as of fiscal 2018,” Moody’s said adding with this capital infusion, these banks’ CET1 ratios are expected to be above 5.5%, which is the minimum capital requirement under the Basel III norms in India.