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Finance Ministry asks state-run banks to monitor top loan accounts
March 29, 2023
India has asked state-run lenders to adopt stricter monitoring of top corporate loan accounts and submit a plan to deal with business risks in key areas within two weeks, three banking sources said on Monday.
Indian banks, in the past, have had to take deep haircuts on their exposure to debt-laden companies admitted under bankruptcy legislation.
“Bankers were told that it would be prudent to increase stress-testing of large corporate loan accounts,” a banker at a state-run bank said.
Banks were also asked to monitor the mark-to-market impact on their trading books amid rising interest rates and maintain their liquidity ratios, the sources added.
None of the sources wanted to be named because they are not allowed to speak to media.
Finance ministry officials met state-run bank chiefs on Saturday, with lenders asked to identify stress points, including “concentration risks and adverse exposures,” according to a government statement.
The Finance Ministry did not respond to a Reuters email seeking additional details from the meeting.
Lenders were also asked to increase the frequency of assessing their asset-liability profiles amid the global banking turbulence, another banker said.
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