Bankers say post-recapitalisation, PSBs 4-5 quarters from profitability
The recapitalisation of 12 State-owned banks will improve their core capital, crucial for meeting regulatory norms. But, it will take four-five quarters for them to show stable performance, leading to profitability, according to bankers.
Senior public sector bank executives said banks will look at expanding their loan books, albeit cautiously. The focus will be on the retail, agriculture and micro, small and medium enterprises (collectively termed RAM) segment where the demand is robust and risks are spread over a large number of borrowers.
Chief Economic Advisor Krishnamurthy Subramanian on Friday advocated taking forward the P J Nayak committee’s recommendations on governance reforms in public sector banks (PSBs), saying until these reforms were institutionalised, the risk in the sector would persist.