Markets, Moody's Applaud $32 Billion Bazooka for India Banks
- Government pledges record amount to banks to revive lending
- State Bank of India shares jump 25%, Punjab National gains 40%
India's State-Run Banks Soar
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India’s government has won a resounding reception from investors and credit-rating firms for its unprecedented pledge of 2.11 trillion rupees ($32 billion) in capital for the country’s beleaguered state banks.
The move, which drove an index of government-run banks up as much as 26 percent, is part of Prime Minister Narendra Modi’s goal to help lenders meet tighter capital-reserve requirements, as slower economic growth and falling demand erode borrowers’ ability to repay loans. Soured debt is now the highest since 2000, hampering credit expansion that’s needed to spur Asia’s third-largest economy.