Three large pvt bks' total equity 50% of that of 28 PSU bks

[K.Karthik Raja]

Three large pvt bks' total equity 50% of that of 28 PSU bks
.
MUMBAI - With three large private sector banks infusing nearly 300
bln rupees in the current financial year, the total equity base of
these three banks now equals to half of the combined equity of 28
state-run banks.These three private banks are ICICI Bank, HDFC Bank,
and Axis Bank.
As a result of the fact that these private sectors banks in India
have
shown more ability to infuse equity at regular intervals, they are
better
poised than their government-run counterparts to absorb losses in an
environment of rising interest rates.
The relative ability to infuse timely equity may turn out to be an
important differentiator among Indian banks.
The equity infusion by these private banks will also provide a
cushion against a cyclical downturn.
However, expects State Bank of India's rights issue of equity
shares, in which the government is participating, to be a benchmark
for other state-run banks.
State Bank of India, the country's largest lender, is in the
process of
raising 167 bln rupees through a rights issue, in which the government
will maintain its stake by subscribing to the issue. Currently, the
government holds 59.74% in SBI.
Though the long-term prospects of the Indian banking sector have
been regarded as positive,the near-term performance could come under
pressure.
Research Rating is likely to be increasingly cautious in its
medium-term outlook on the performance of Indian banks.

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