Global rating agency Moody’s investor service on Thursday said India’s Budget 2016-2017 is credit negative for public sector banks because of the insufficient allocation of capital for the segment.“The budget is credit negative for public China wholesale household appliance injection mold sector banks because the government has stuck to its capital infusion roadmap ann-ounced in 2015, budgeting Rs 25,000 crore in infusi-ons,” says Srikanth Vadla-mani, a Moody’s vice-president and senior credit officer.“By contrast, we believe that unless the banks receive Rs 1.45 lakh crore for the four fiscal years ending March 31, 2016 to March 31 2019, their credit profiles will worsen,” he added.Under the Indradhanush programme announced last year, the government would infuse Rs 70,000 crore in state owned banks over four years. The banks will therefore have to turn to the government for capital injection at least over the next 18 months.

Global rating agency Moody’s investor service on Thursday said India’s Budget 2016-2017 is credit negative for public sector banks because of the insufficient allocation of capital for the segment. However, it added that the budget is moderately credit positive for most sectors.“However, the proposals do not contain significant measures to address structural fiscal challenges,” it said.According to Moody’s, the budget indicates a continued commitment to gradual fiscal consolidation by bringing down fiscal deficit to three per cent over the next two years.

The rating agency pointed out that public sector banks are unlikely to gain access to the capital markets for equity capital in the near term, given their low valuations. On the issue of securitisation, Moody’s said that the development of securitisation markets in India and China will help the two countries achieve their common goal of building inclusive financial systems that will ultimately bring affordable credit to the underprivileged segments of their societies