State-run banks in the country have been asked by the government to adopt stricter monitoring of top corporate loan accounts and also submit a plan to deal with business risks in key areas within two weeks.
By India Today Business DeskAt a time when rising interest rates are hurting banks around the globe, the government has asked the country’s public lenders to adopt stricter monitoring of top corporate loan accounts.
They have also been asked to submit a plan to deal with business risks in key areas within two weeks, reported news agency Reuters, quoting three banking sources.
A banker quoted in the report said“Bankers were told that it would be prudent to increase stress-testing of large corporate loan accounts.”
They have also been directed to monitor the mark-to-market impact on their trading books amid rising interest rates and also maintain their liquidity ratios, added the sources.
It may be noted that finance ministry officials met with state-run bank chiefs on Saturday, where the lenders were asked to identify stress points, including concentration risks and adverse exposures. This was as per a statement released by the government.
Additionally, the lenders were asked to increase the frequency of assessing their asset-liability profiles amid the global banking turbulence, according to another banker.
The government’s direction to public lenders comes in the wake of the ongoing global banking turmoil, triggered by the collapse of a few US regional banks. Earlier, news agency Reuters had reported that the government had sought details of the bond portfolios of these banks as a precautionary measure.
Also Read | Banking stress puts US, Europe on watch for credit crunch
However, the government and even the Reserve Bank of India have clearly mentioned that the Indian banking system continues to be stable and resilient, and that lenders have built sufficient buffers to shield themselves in the event of an emergency.
Jakob Auer
Benny Borer
Kole Prosacco