Govt wants state-run banks to tap markets

June 07, 2022

The government wants state-run lenders to tap the markets on account of their stellar financial performance and give a credit push to the economy, which looks upbeat with all key metrics pointing towards high growth. Around eight banks have over 75% government holding.

“State-run banks have performed really well and with all high-frequency indicators pointing towards growth, time that banks strengthen their balance sheet to give a credit push,” said a finance ministry official, adding that the timing and size of the issue will be decided by each bank’s respective board.

India’s economy grew 4.1% in the March quarter, but recent data including robust goods and service tax (GST) assortment and a six-month high growth in core sector has raised expectations of double-digit growth in the primary quarter of this fiscal.

Banks’ non-food credit also grew at 11.3% in April 2022 when compared with 4.7% a year prior. In its most recent report, the country’s largest bank, State Bank of India, has raised the forecast for the country’s GDP growth by 20 basis points to 7.5%.

“We expect some of the big lenders to come out with their market offerings and given their performances, their issues are supposed to garner a favourable response,” the above quoted official said.