Veteran banker Uday Kotak has said the financial sector needs recapitalisation as the capital position has been affected by rising bad loans. The Kotak Mahindra Bank managing director has also disclosed that the lender is now bringing in three filters in the post-Covid era.

In his communication to the shareholders in the bank’s annual report, Kotak has said the government and industry should not worry too much about the current fiscal year’s slowdown and instead they must plan and work towards a medium-term growth strategy.

He, however, pointed out that there will be costs that cannot be borne by businesses or the government, and these will be borne by the financial sector.

``The banking sector’s loan book is about Rs 100 lakh crore and the total capital of all banks in India is about Rs 11 to 12 lakh crore. So, if 4-5 per cent of loans turn bad due to Covid-19, the capital position of the banking sector will get impacted by around 40 per cent,” Kotak said.