Hit by the pandemic, Indian banks will need $20-billion additional capital to tide over asset-quality issues, Credit Suisse said in a report on Wednesday. The investment bank also raised its credit cost estimates by 20-60% in view of the lockdown and the extension of another three months’ moratorium granted by the Reserve Bank of India (RBI). Credit Suisse expects public sector banks to dial the government for $13 billion in recap. Rising risk aversion and accelerating rating downgrades are expected to add to asset quality stress for banks. Private banks’ tier 1 capital ratio is healthy at 13% and, coupled with their strong pre-provision profitability, it is adequate to absorb up to 4% additional credit cost. “However, with ~30% of retail loans under moratorium and 20-40% of corporate book ‘BBB’ or below where refinance risk has gone up, we expect them to shore up capital buffers and estimate $20 billion of capital raising by Indian banks,” Credit Suisse said.