Spread the risk to mitigate it, say PSBs
By Joseph Samson
Jun 14, 2011
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Public sector lenders have taken to spreading their risk to a larger number of borrowers so as to mitigate it to some extent. The trend these banks used to follow earlier was to lend out more to a selected few borrowers. But such lending increased chances of risk even if one borrower defaulted.

In order to overcome this ambiguity, PSBs have moved to reducing the proportion of their lending and diversifying it in smaller amounts among a larger number of borrowers.

The largest lender of the country, State Bank of India reduced the loan amount given out to its top 20 borrowers by two thirds in the last fiscal to Rs 65,236 crore.

Other lenders to also bring down the lending percentage were Bank of Baroda, Punjab National Bank, Union Bank and Oriental Bank of Commerce.

A similar effort was put last fiscal by banks in their deposit side too. In order to reduce the weight of liabilities, they diversified it by reducing the course of bulk deposits.


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