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PSU banks plan Rs 82,500 crore capital raise ahead of ECL

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PSU banks plan Rs 82,500 crore capital raise ahead of ECL

The plans come as banks prepare for the new provisioning regime, which will take effect from April 2027, even as their capital buffers remain comfortably above regulatory requirements.

SBI accounts for the bulk of the planned fundraising at Rs 60,000 crore, followed by Canara Bank at Rs 8,000 crore, Bank of India at Rs 7,500 crore and Central Bank of India at Rs 7,000 crore. Banks are raising capital ahead of the ECL transition, with the four PSBs citing the new provisioning framework rather than growth as the primary consideration for their fundraising plans. Capital buffers remain strong, with median CET-1 rising 97 bps year-on-year to 16.4% and median CAR increasing 61 bps to 18.2% in Q1FY27. ECL could put varying pressure on individual banks' capital, while fading provisioning benefits and higher equity levels could weigh on returns as lenders expand their balance sheets.

Public sector banks are stepping up plans to raise capital ahead of the Reserve Bank of India's expected credit loss (ECL) framework, with announced fundraising plans across four large lenders exceeding Rs 80,000 crore for FY27. The plans come as banks prepare for the new provisioning regime, which will take effect from April 2027, even as their capital buffers remain comfortably above regulatory requirements. The four lenders include State Bank of India (SBI), which has approved a Rs 60,000 crore fundraising programme through rupee and foreign-currency debt; Canara Bank, which plans to raise Rs 8,000 crore; Bank of India, which has approved Rs 7,500 crore through Rs 2,500 crore of additional Tier-I bonds and Rs 5,000 crore of Tier-II bonds; and Central Bank of India, which has board approval to raise Rs 7,000 crore.


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