Market gives thumbs up to capital infusion plan, but call on PSBs still difficult to make: Mehraboon Irani

In a chat with ET Now, Mehraboon Irani, Principal & Head- Pvt Client Group Business, Nirmal Bang Securities, his views on the likely impact of the government’s capital infusion plan on stocks of public sector lenders.

ET Now: While recapitalising banks seems to be an easy way out, it gives an an indication that PSU banks do not have ability to grow on their own?


Mehraboon Irani: True. If India’s GDP growth has to grow, PSU banks need to be taken care of. They do not have money to lend and, ultimately, the recapitalisation of these lenders was important. That was supposed to be a trigger for the market.

Since the government has come out and it is a figure higher than what the market was expecting, it has come at as thumbs up for public sector banks ( PSBs) as of now.

Is it the end of the problem for the PSU banks? I have been stating the same thing that we could have still have some more strain on the assets quality front. But may be a year down the line or two, things should certainly look better. If we believe in an economic recovery and with money getting infused into PSU banks, we can certainly expect things to look much better for them may be 12-18 months down the line.

So over the longer-term, it is a question when do you want to buy into PSU banks? They have returned superbly last week. Should we buy now or should we wait for one more correction to come that is a difficult call to make.