Seeing a lack of growth capital in PSU banks: Macquarie Cap

The banking sector has been the center of focus as the government mulls a mega foreign direct investment (FDI) push in the sector, weighs options to allow 100 percent FDI in private banks and 49 percent FDI in public sector undertaking (PSU) banks.

In an interview with CNBC-TV18, Suresh Ganapathy, Banking Analyst at Macquarie Capital Securities shared his take on the likely impact.

In our analysis whatever capital PSU banks are likely to get from the government barely suffices the provisioning requirements and basel III requirements, he said.

We have recently upgraded only State Bank of India (SBI) because of the fact that they are the only ones which are very well capitalised and they might land up getting growth capital, he added.

Speaking about non-banking financial companies (NBFCs), he said that there is correlation between rising rates and NBFC performance that is there compared to that in case of private sector banks, so if rates were to rise, clearly this stock performance in the near-term tends to be a bit more weaker, that is going to happen in the near-term, in the next three-six months, said Ganapathy.

For full interview, watch accompanying video...