NEW DELHI: Global rating agency Moody 's Investors Service said on Wednesday that the government's Rs 2.11 lakh crore recapitalisation plan for public sector banks is a credit positive for the sector.The government on Tuesday announced a fresh package to breathe life into ailing public sector banks through a Rs 2.11 lakh crore infusion that will provide them with much-needed share capital for lending and revive investment, crucial for job creation in Asia's third-largest economy. "The quantum of the plan is large enough to comprehensively address these banks' weak capitalization levels and is a significant credit positive as weak capitalization is the main credit weakness for most rated public sector banks," said Srikanth Vadlamani, a Moody's Vice President and Senior Credit Officer. A similar structure this time would have some negative implications for the banks' liquidity and profitability profiles. "While there may be some differentiation, with banks deemed to be performing well receiving more growth capital, we expect all rated public sector banks to get enough capital to satisfy their Basel 3 capital requirements as well as adequately address their asset quality challenges. Thus, while the extent of improvement may vary, we expect the capitalization profiles of all rated public sector banks to improve," the agency said.

Source: Times of India October 25, 2017 06:10 UTC