The current earnings season breached the red line by a combined Rs 43,026 crore for FY18. The losses indicate that North Block may have to set aside more capital this fiscal year for the lenders it runs.“We think that the government will have to infuse at least Rs 1 lakh crore to keep banks afloat,” said Suresh Ganapathy, research analyst at Macquarie Capital Securities.Other banks like IDBI Bank, Central Bank of India, Indian Overseas Bank, Corporation Bank and United Bank of India, which Mumbai: Toward the fag-end of FY18, North Block had injected Rs 80,000 crore into state-run lenders through recapitalisation bonds. Just about a quarter since that move stressing unflinching federal commitment to public-sector banks, nine of them have posted a combined loss totalling to over half of what New Delhi invested afresh.Many more state-run banks are yet to announce their earnings, but nine of the 11 that have done so in are already facing prompt corrective action (PCA), have not yet declared their earnings.By initiating PCA, the regulator restricts banks from opening new branches, hiring staff and lending to risky borrowers. PCA is imposed when total bad loans after provisions have crossed 10 per cent and the bank has reported losses for two consecutive years.Banking analysts expect that the performance of banks facing PCA would be affected by the new central bank norms on bad loans, with the regulator doing away with erstwhile debt restructuring schemes that allowed banks to window-dress stressed advances. Losses at PSU banks could wipe away at least 75 per cent to 85 per cent of the capital infused afresh by the government.64186365

PSU Bank Losses MountThe highest annual loss was posted by Punjab National Bank, at Rs 12,282 crore, which absorbed 50 per cent of the losses due to the Nirav Modi-Gitanjali group scam. Oriental Bank of Commerce came in second.So far, just two government banks — Vijaya Bank and Indian Bank — reported annual profits of Rs 727 crore and Rs 1,258 crore, respectively.As many as 11 PSU banks are facing PCA while additional restrictions, such as ban on lending, have been placed on two of these lenders on watch-list — Dena Bank and Allahabad Bank.Some bankers and analysts are hopeful that the situation will improve later this year. “We believe this pain will last for the next two quarters,” said Suresh Ganapathy of Macquarie. Bankers say that resolutions in some of the high-value cases, like Binani Cement, Essar Steel and Bhushan Steel, are expected to materialise either in the first or the second quarter, which will reflect in better earnings.