MUMBAI: Moody's Investors Service said on Thursday the 11 Indian state-run banks that it rates could need up to 950 billion rupees ($14.76 billion) in equity capital by March 2019, far above the 200 billion rupees the government plans to inject into state banks by then.
Weak capitalisation levels will remain a key credit weakness for the 11 banks, the ratings agency said, adding that they had limited ability to raise external capital.
Moody's said it estimated that the 11 banks - including State Bank of India
"Moody's believes that capital infusions from the government remain the only viable source of external equity capital, because of the public sector banks' low capital market valuations, which would likely continue to deny them the option of raising fresh equity from the capital markets," the agency said.
It said it expected impaired loans to increase during the horizon of this outlook, but at a slower pace versus the past two years. Provisioning costs will stay "broadly in line" with the levels during the last fiscal year to March, Moody's said.
The other state banks Moody's rates are Indian Overseas Bank