Home » ‘Reduction in loans of PSU banks’

‘Reduction in loans of PSU banks’

Morgan Stanley said on Thursday that Indian state-owned lenders expected to see additional additions to bad loans, but banks' structural issues could result in returns on their shares.

Some of the country's public banks have long struggled with a pile of bad debts, prompting the government to pump its balance sheet into more funds.

“Over the past few years, state-owned venture banks have seen significant capital infusion by the government, density of risk-weighted assets, provisions and some major recoveries,” the brokerage said in a report. In the next few years, fresh additions to bad debts, credit costs will also be moderate. The brokerage preferred India's largest lender State Bank of India as well as large private banks, expecting them to play a major role in the corporate recovery cycle.

In February, SBI said its asset was largely stable and the lender reduced its credit cost guidance to less than 2% for the fiscal year. The return to pre-epidemic levels of retail growth far outstripped the bank's third-quarter profit from previous estimates.

Morgan Stanley said the weak underwriting practice, the sector's declining loan market and shares would also decrease on stocks of many other public sector banks, as they find attractive valuations attractive.

Brokerage analysts said, “We think state-owned enterprise banks will continue to lose market share of debt, technology changes, strong competition, and a weak internal rate of capital .”

The Nifty public sector bank index was down 0.4% on Thursday.

You have reached your limit for free articles this month.

Membership benefits included

Today's paper

Get a mobile-friendly version of the article from the newspaper of the day in an easy-to-read list.

unlimited access

Enjoy reading as many articles as you want without any limitations.

Personal recommendations

A selected list of articles that match your interest and taste.

Fast page

Move seamlessly between articles as our pages load instantly.


One-stop-shop to see the latest updates and manage your preferences.


We inform you about the latest and most important events three times a day.

Support quality journalism.

* Our digital subscription plans currently do not include e-paper, crosswords and print.


About the author


Add Comment

Click here to post a comment