‘Identify stress points, adverse exposures’: What FM Sitharaman told state banks amid global turmoil

NEW DELHI: With The global banking industry is in turmoil following the collapse of Silicon Valley Bank in the United States, the Center on Saturday asked all public sector lenders (PSBs) to assess various parameters of financial health.
The direction was given at a review meeting chaired by Union Finance Minister Nirmala Sitharaman.
After a detailed meeting with the heads of state banks, the finance ministry said in a statement that lenders had been asked to identify stress points, including “concentration risk and risk exposure” disadvantage”.
During the meeting, Sitharaman considered the level of risk of state-run banks and immediate external global financial stress from both short-term and long-term perspectives.
Sitharaman told lenders under the statement, banks should protect themselves from any potential financial shock.
“All key financial parameters suggest stable and resilient public sector banks,” the statement added.
During the review meeting, an open discussion was held with the heads of the banks on the global scenario. after the failure of the Silicon Valley Bank and Signature Bank together with UBS takes over Credit Suisse in crisis.


“The finance minister stressed that PSBs must look closely at business models to identify stress points, including concentration risks and adverse risks. She also encouraged PSBs to take advantage of opportunities. to develop detailed crisis management and communication strategies,” the statement said.
FM Sitharaman’s 5 point advice for State bank

  1. Take concentrated steps to attract deposits based on steps the government has taken to reduce tax differentials on certain debt instruments;
  2. Rotate their strengthened financial position to support the credit needs of the developing economy;
  3. Focus on credit access in States with credit coverage below the national average, particularly in the Northeast and East regions of the country;
  4. Increasing business presence in new and growing areas such as One District One Product (ODOP), e-NAM and drones;
  5. Aims to strengthen the traditional banking presence in border and coastal areas;
  6. PSBs should promote Mahila Samman Bachat Patra announced in Budget 2023-24 through special campaigns and campaigns.

Meanwhile, banking executives told Sitharaman that they are alert to developments in the global banking sector and are taking all possible steps to insulate themselves from any financial shocks. any potential main.
This review meeting took place amid turmoil in the US banking system due to the recent collapse of Silicon Valley Bank and several other banks in contagion.
Several Indian startups with funds deposited in Silicon Valley Banks have failed and possibly others as well.
However, Analysts have said that Indian banks are in a relatively good position to combat global headwinds amid the crisis.
Earlier this week, S&P Global Ratings said Indian lenders are likely to withstand any potential contagion effects arising from the US banking turmoil.
“Strong funding profiles, high savings rates and government support are among the driving factors behind the financial institutions we rank,” the ratings agency said.


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