The finance ministry has asked public sector banks (PSBs) to do proper monitoring of top loans and make adequate provisions for pledged shares of big corporates in view of the current global financial scenario emanating from the failure of some international banks in the US and Europe.

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According to sources, there is a need for integrating market data of pledged securities to trigger timely actions.

Besides, in the recent meeting with Finance Minister Nirmala Sitharaman, PSB chiefs were asked to manage overall exposure to corporate, including pledged shares.

The finance ministry also emphasised that it would be prudent to increase stress-testing of large corporate loan accounts, the sources said.

PSBs were also advised to focus on granular deposits against bulk and corporate deposits and desist from the discretionary pricing system.

The ministry also underlined the need to regularly study variations in pricing between loan applications with similar risk ratings and urged banks to increase their share in EBLR-linked advances for effective transmission in the rate of interest to customers for effective impact on the economy.

Last week, the finance minister reviewed the PSBs on various financial health parameters and their resilience.

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She urged the banks to remain vigilant about the interest rate risks and regularly undertake stress tests.

During the two hours meeting with MDs and CEOs of PSBs, an open discussion was held on the global scenario amid the failure of the Silicon Valley Bank (SVB) and Signature Bank (SB), along with the issues leading to the crisis in Credit Suisse.

She also discussed the developing and immediate external global financial stress from both short and long-term perspectives.

During the PSB review meeting, she emphasised that the banks should undertake due diligence and adhere to the regulatory framework by focusing on risk management and diversification of deposits and assets base.

The finance minister underlined that PSBs must look at business models closely to identify stress points, including concentration risks and adverse exposures.

She also exhorted PSBs to use this opportunity to frame detailed crisis management and communication strategies.

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