According to three banking sources on Monday, India has urged state-run lenders to implement greater monitoring of high-profile corporate loan accounts and submit a plan to deal with business risks in crucial regions within two weeks.
In the past, Indian banks were forced to accept significant losses on their exposure to debt-ridden businesses that were allowed to file for bankruptcy.
An employee of a state-run bank said, “Bankers were advised to boost stress-testing of major corporate loan accounts.”
According to the sources, banks were also urged to maintain their liquidity ratios and keep an eye on the effects of mark-to-market on their trading books in the face of rising interest rates.
Because they are not permitted to speak to the media, none of the sources wanted their names to be used.
According to a government statement, lenders were asked to identify stress spots, such as “concentration risks and unfavourable exposures,” when finance ministry officials met with the heads of state-run banks on Saturday.
An email from Reuters asking for more information about the meeting received no response from the Finance Ministry.
In light of the turmoil in the world’s banking system, lenders were also urged to review their asset-liability profiles more frequently, according to a different banker.
The sources continued that banks were also instructed to keep an eye on the effect of mark-to-market on their trading books in the face of rising interest rates and to maintain their liquidity ratios.
Due to their restrictions on speaking to the media, none of the sources wanted their names to be used.
Lenders were asked to identify stress spots, including “concentration concerns and unfavourable exposures,” according to a government statement. On Saturday, finance ministry officials met with the heads of state-run banks.
An email from Reuters requesting more information on the meeting was not answered by the Finance Ministry.
In light of the current turmoil in the global banking system, lenders were also urged to review their asset-liability profiles more frequently.
