BUSINESS
Some of these changes seem to be largely fine-tuning and calibrating some core internal processes, says Moody's
The capital infusion into public sector banks (PSBs) will help them maintain their capital ratios, but the reform agenda of the government for banks does not emphasise on better risk management systems in banks, said rating agencies Moody's and S&P.
They say the reform road map is cosmetic in nature.
The global rating agencies believe the capital infusion is a good move, but it alone cannot be the panacea for the problems that plague the state-owned banks.
Moody's said that the reform agenda for the banks is at best only fine-tuning. "For instance, it is now envisaged that a bank's Board will monitor the bank's performance on key metrics on a more frequent basis and there should be a performance management system to incentivise and fast track good performers," said Srikanth Vadlamani, Moody's vice president and senior credit officer, in a release.
"Banks will also have to more closely monitor corporate exposures beyond a certain size." "However, some of these changes, while positive, seem to be largely fine-tuning and calibrating some core internal processes at these banks," said Vadlamani.
Rating firm S&P also believed that capital infusion will only take care of a part of the solution.
"We believe the capital infusions alone won't go far enough," said S&P Global Ratings credit analyst Deepali Seth-Chhabria. "Beyond solving the immediate balance-sheet problems, public sector banks require significant improvement in risk management practices, efficiency gains, and better overall governance to boost the health of the sector. Nevertheless, it is a good beginning."
The government said in late 2017 that it would inject a total of Rs 2.11 lakh crore into government-owned banks. Under the plan, Rs1.35 lakh crore of the total infusion will come from recapitalisation bonds and Rs 76,000 crore from budgetary support and fund-raising in the capital markets in the fiscal years ending March 31, 2018 and 2019. The latest announced plan for 2017-2018 includes Rs 80,000 crore through recapitalisation bonds and the remaining Rs 8,140 crore through budgetary allocation.
"The government has announced various reforms for public sector banks, but we currently do not believe these reforms are meaningful enough to address the structural corporate governance issues facing these entities," said Vadlamani.
However, he said the announcement is a credit positive for all public sector banks, especially the weaker ones, as the government has made it explicit that it would ensure that all such banks meet minimum regulatory capital requirements.
The bonds which will be issued by the government or a government agency will not have statutory liquidity ratio(SLR) status and hence these bonds will not quality for SLR holdings of banks. The bonds will have tenure of 10-15 years and the coupon on these bonds will be based on the average G-sec yields for last three months with some spread.
DNA TV Show: Hindus in Bangladesh unite against fundamentalism
‘Another example of…’: MEA on Canada labelling India ‘cyber adversary’
'Bhai kyu jhooti tassali....': Mrunal Thakur criticizes fan who photoshopped her in Diwali pic
Mukesh Ambani, Anil Ambani set to earn money from Singham Again's box office collection, here’s how
Adani Power cuts Bangladesh electricity supply by half due to $846 million unpaid bills
Here's what is happening inside Ratan Tata’s Bombay House since after death of business magnate
Virat Kohli dispels retirement rumours, suggests he may continue playing cricket till....
Meet man, highest UPSC exam scorer, who broke IAS Tina Dabi's record, he is...
Swati Maliwal pours bottle of polluted water outside Delhi CM Atishi’s residence; WATCH
IPL 2025: R Ashwin tops CSK's wishlist as franchise plans to utilize RTM for THIS New Zealand star
'Abki baar...': AI imagines Donald Trump, Kamala Harris as Indian politicians, netizens react, WATCH
Amid bomb threats, ammunition cartridges found in Dubai-Delhi Air India flight
This Indian king, was first man to make history by marrying foreign woman during his trip to...
Mukesh Ambani's Jio once again TOPPED in global telecom industry, sets record in...
Bhai Dooj 2024: Date, shubh muhurat, significance, rituals and more
New ‘Satoshi Nakamoto’ emerges: Meet man who declares himself to be Bitcoin founder but fails to...
Watch: Former CSK star gets hit for 6 sixes in an over against England during Hong Kong Sixes
'Makes no sense': Ex-India star slams Rohit Sharma, Gautam Gambhir for absurd Sarfaraz Khan decision
World's richest man Elon Musk faces lawsuit from Ex-Twitter CEO Parag Agrawal for...
Security forces kill 2 terrorists, including a foreign national in Jammu and Kashmir
WWE Crown Jewel 2024: Full match card, timing, live streaming details - All you need to know
'Absurd and baseless': India dismisses Canadian minister's allegations against Amit Shah
IND vs NZ: Virat Kohli scripts history in Mumbai Test, becomes first player in world to...
This 51-year-old woman leaves husband to marry 30-year-old Indian security guard
Mukesh Ambani's best plan for Jio users, 200GB data, 90 days of unlimited calls at just Rs...
'Thanks for...': Abhishek Bachchan's viral statement amid divorce rumours with Aishwarya Rai
Jammu and Kashmir: 2 terrorists killed in encounter with security forces in Anantnag
21-Day Mars, Moon simulation in Ladakh
Prashant Kishor's fee for advising in one election will leave you shocked, it is Rs...
Dua Padukone Singh: Here's how Deepika Padukone, Ranveer Singh named their baby girl
Another BIG move by Mukesh Ambani, set to provide some help for debt-ridden Ghana as Reliance Jio...
J-K: Gun battle breaks out between security forces and terrorists in Srinagar's Khanyar
Noel Tata takes BIG decision at TCS after Ratan Tata's death, plans to hire...
'Will chop them up...': Mithun Chakraborty hits out at TMC’s Humayun Kabir at Kolkata rally
Delhi Air Pollution: Delhi-NCR AQI turns ‘very poor’ as city wakes up to toxic smog post-Diwali
Gautam Adani's next BIG step: Adani Power stops Bangladesh’s power supply due to...
Indian troops start patrolling Demchok sector in eastern Ladakh following India-China disengagement
Amy Jackson announces first pregnancy with husband Ed Westwick, flaunts baby bump in adorable pics
In THIS Indian village, families live with cobras, the reason is...
Hardik Pandya flaunts his special 'World Champion' ring after being retained by MI, video goes viral
Happy Govardhan Puja 2024: Top 50 WhatsApp wishes, messages, quotes for loved ones
Despite massive Diwali opening, is Singham Again paying the price for banking on huge star cast?
Shah Rukh Khan's heartfelt gesture towards jewellery store staff wins internet, watch
DNA TV Show: Public calls out celebrities’ hypocrisy on Diwali pollution
Fashion designer Rohit Bal dies at 63: Last year, he was on ventilator for heart ailments
BCCI scraps India's intra squad warm-up game ahead of Border-Gavaskar Trophy, reason revealed
Legendary fashion designer Rohit Bal dies at 63 after prolonged illness
Another terrorist attack in J-K, militants shoot two non-locals in Budgam