The stock of bad loans at these banks is likely to rise in the next two years, according to the report.
In its latest report, Moody’s has highlighted a key issue facing the banking sector. It is estimated that the country’s large state-owned banks would require about Rs 70,000 crore to Rs 95,000 crore of equity capital.
The stock of bad loans at these banks is also likely to rise in the next two years, as per Alka Anbarasu, vice-president and senior analyst at Moody’s.
“Smaller public sector banks will find it tough to raise capital through markets given the current pressure in their asset quality,” Livemint quoted Siddharth Purohit, senior banking analyst at Angel Broking Ltd as saying.
“Once large 40-50 stressed accounts are resolved, banks involved in the consortium will need to take haircuts and make provisions accordingly, eroding their profits,” Purohit added.