A recent Assocham-Crisil joint study has revealed that the public sector banks (PSBs) will by March 2019 need equity worth Rs 1.7 lakh crore, which can turn out to be higher on an increased credit growth.
Commenting on the issue, an official told the media, "The public sector banks need equity of Rs 1.7 lakh crore by March 2019, which is a tall order considering that banks have so far contributed to nearly half of the debt funding needed in the infrastructure space."
"A sharp fall in profitability has reduced capital generation from internal accrual of banks, while weak performance has diminished their ability to raise capital from external sources. And the capital needs can turn out to be higher if credit growth is stronger," he said.
"These constraints would necessitate a large part of infrastructure needs to be met from the corporate bond market," he further added.