FinMin flags concentration risk at 5 PSBs
The finance ministry has cautioned five of the 12 public sector banks (PSBs) about the risk of credit concentration and asked them to ensure a well-diversified credit portfolio to reduce exposure to any particular group or industry.
During the 2022-23 (FY23) performance review of PSBs earlier this month, the ministry highlighted that the top 10 borrowers in the case of Bank of India, Canara Bank, Punjab National Bank, Punjab & Sind Bank, and UCO Bank constituted more than 10 per cent of their total outstanding credit as on March 31, 2023.
Doing a scenario analysis, the ministry examined the risk to capital adequacy ratio of the five PSBs that might occur in case the top three borrowers or the largest group borrower defaults.
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