Indian state-run banks plan overhaul for risk-based profitability and enhanced scrutiny of securities
State-run banks will revamp their processes to create a risk-based profitability measurement framework to include more detailed and frequent scrutiny of securities pledged by high-value borrowers. They will also widen the coverage of early warning signals to help identify and reach out to distressed borrowers.
These measures are the building blocks of the proposed strategic roadmap until FY26 being firmed up by public sector banks (PSBs) in discussions with the government, people aware of the development told ET.
“The government wants PSBs to transition to transaction- and cashflow-based lending using new technology from traditional asset-based lending,” a senior bank executive said, adding that banks will pursue risk-based profitability in all relevant loan products. Another bank executive said key focus areas identified by PSBs include increasing the share of current and savings accounts in overall deposits and updating risk management practices.
