As so many of their peers across the world have already done, Indian banks appear ready to hit up investors for more cash.
The country's lenders are expected to raise several billions of dollars in fresh equity over the next few quarters as bad debts rise and the government pressures them to boost lending.
Financial groups across Asia's third-largest economy are still relatively healthy compared with counterparts in the West and East. But they are burning through money quickly as the country's once red-hot economy slows, eating into profits.
All eyes are on banks with capital adequacy ratios (CAR) that fall below the government's minimum 9 percent standard.
Bank of Maharashtra, Canara Bank and Dena Bank, all with tier-1 capital of less than 7 percent, are prime candidates for raising money, according to analysts."
"I do think in Asia there are companies in places that need to raise capital and haven't necessarily tackled it. One of them is India," said Sunil Garg, a JPMorgan analyst who covers Asia financial institutions.
An internal study obtained by Reuters from two investment firms predicts Indian state-run banks will likely raise between $4 billion to $6 billion in the coming months. The firms did not want to be named because it was an internal study.
At least 17 state-run banks have a tier-1, or equity, capital adequacy ratio of less than 7.5 percent, making them prime candidates for an equity infusion, the study showed.
State Bank of India Chairman O.P. Bhatt said earlier this year that the bank may need to raise between $2 billion to $4 billion in equity in the next financial year.
India has 27 state-run banks controlling almost three-fourths of the banking industry.
"At least one-third or half of the government-run banks may need equity capital if they grow at the current pace," said Ritesh Maheshwari, senior director for Asian financial institutions rating at Standard & Poor's.
Banks throughout the world have raised tens of billions of dollars in the last few months alone to strengthen their balance sheets. In Asia, banks from Japan to Singapore to Indonesia have launched rights offerings, which ask existing investors to purchase more shares at a discount.
Indian banks have held back so far, in part because of strong profits through late last year and because of heavy government ownership.
But a wave of equity offerings may be inevitable now.
India's central bank requires banks to maintain a total capital adequacy ratio -- equity and debt capital-- of 9 percent, but the government has said it would prefer 12 percent as a cushion in the global financial crisis.
That preference comes as the Indian economy is slowing sharply, hitting the stock prices of its financial sector hard.
Morgan Stanley, in a recent research note, estimated Indian banks' gross bad loans will rise to 6.1 percent by 2010/11. The government said recently it will infuse 38 billion rupees ($758 million) into three state lenders to bolster capital adequacy.
"We expect many banks to raise equity capital in the next 12-18 months," said Rajeev Suneja, senior vice president at Kotak Mahindra Capital Co, the former Indian partner of Goldman Sachs.
Bankers expect state lenders to start out with rights issues as at least half the offer would be guaranteed by the government and hefty discounts will force other shareholders to subscribe.
State-run banks were among the first to raise capital in the last cycle that began in 2004. They raised more than $2 billion between then and early 2006, Thomson Reuters data show. Privately run ICICI Bank raised $4.6 billion through a share offer in 2007.
And state lenders are likely to lead the pack again. While private sector banks have tempered lending, state-run banks are being forced to keep up the momentum as the government and central bank desperately try to stave off a sharper slowdown.
(US$1 = 50.13 rupees)