Macro Economic Survey 2016: Financial stocks jump; govt may sell PSUs to recapitalise banks

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26 Aug, 2025 12:21

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Moneycontrol Bureau Bank stocks which have been struggling throughout the year seem to get a new lease of life after Macro Economic Survey 2015-16 was tabled in the Parliament. Heavyweights like SBI, Axis Bank, HDFC Bank and PNB were up 1-2 percent, with the Bank Nifty ending up 1.7 percent on Friday. The index is down 26.39 percent year-to-date, slipping 27.60 percent in a year's time. So what's the big joy about? Recapitalisation, the much needed fund that these banks are hoping for may become a reality soon. The Economic Survey said the government could sell off some PSUs to make additional investments in state-owned lenders, as a booster to the PSU banks grappling with bad asset quality. Minister of State Finance Jayant Sinha has also said that the government has given power to banks to recover money from debt ridden promoters.In the quarter ending December 2015, public sector banks saw a significant increase in non-performing loans (NPLs). Reserve Bank of India (RBI) has made a mandate to recognise stressed assets. However, despite RBI push, Moody's expects some weak exposure to remain unrecognised. “By Q4FY16, banks would have recognised a meaningful proportion of their exposure to these very weak corporates, largely in the steel sector, as NPLs. However, some large corporate exposures with weak financial metrics may continue to remain as standard assets on the banks' books,” it says in a report.Meanwhile, the survey recommends that given the deterioration in asset quality and gradual implementation of Basel III, banks will have to improve their capital positions to meet unforeseen losses in future. The estimated capital requirement is likely to be about Rs 1,80,000 crore by 2018-19. Of this total requirement, the government proposes to make Rs 70,000 crore available out of budgetary allocations during the current and succeeding years.Last year, the government had announced a revamp plan 'Indradhanush' to infuse Rs 70,000 crore in state-owned banks over four years.Follow @NasrinzStory