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Rediff News  All News  » Business » Stay clear of high-risk deals, govt tells banks

Stay clear of high-risk deals, govt tells banks

October 15, 2008 09:51 IST

The finance ministry has issued an advisory to public sector banks to be extra vigilant and avoid transactions where risk element is high.

"We are witnessing a meltdown in the US financial markets, which is spreading to the financial markets in the United Kingdom and Europe.

"Prudent practices have put the Indian financial system in good stead. International developments, however, underscore the need for banks to be extra vigilant in avoiding transactions where the risk element is very high," said Financial Service Secretary Arun Ramanathan.

The ministry has provided bank-wise non-performing assets in housing, commercial real estate , personal loans, among others and has sought corrective action where the bad loans are high.

Sources said that last month, the government swung into action and asked for data on delinquency rates from the public sector players which account for two-thirds of the banking business in the country.

While the performance was reviewed by Finance Minister P Chidambaram and the overall climate was found satisfactory, his officials are holding discussions with individual banks, which have seen a spike in sticky assets, to assess the overall performance.

BS Reporter in New Delhi