Identify stress points, FM tells PSBs

Tribune News Service

New Delhi, March 25

Amid the current global financial scenario emanating from the failure of some international banks in the US and European Union, Finance Minister Nirmala Sitharaman has told public sector banks (PSBs) to look at their business models closely to identify stress points, including concentration risks and adverse exposures.

Global banking crisis

• Banks told to frame crisis management strategies amid global banking crisis
• Told to stay vigilant on interest rate risks and to regularly undertake stress tests

She said this during a meeting here to review the performance of PSBs on various financial health parameters and the resilience of PSBs in light of global financial scenario arising out of the failure of Silicon Valley Bank and Signature Bank along with issues leading to the crisis in Credit Suisse.

The meeting was also attended by Union Minister of State for Finance Bhagwat Kishanrao Karad; Vivek Joshi, Secretary, Department of Financial Services (DFS); and MDs and CEOs of public sector banks. The MD and CEOs of the PSBs informed the Finance Minister that they are vigilant of developments in the global banking sector and are taking all possible steps to safeguard themselves from any potential financial shock. All the major financial parameters indicate stable and resilient PSBs with robust financial health.

The PSBs also informed Sitharaman about their corporate governance practices, adherence to regulatory norms, ensuring of prudent liquidity management and continuation of focus on having robust asset-liability and risk management. Sitharaman said PSBs should also use this opportunity to frame detailed crisis management and communication strategies. She reviewed the exposure of PSBs to this developing and immediate external global financial stress from both the short and long-term perspectives.

After detailed deliberations, the Finance Minister advised PSBs to remain vigilant about interest rate risks and regularly undertake stress tests. Sitharaman also highlighted that PSBs must leverage the full potential of branches opened in international financial services centres in GIFT City Gujarat to identify international opportunities, including prospects related to persons of Indian origin (PIOs).

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