The Hindu Business Line : PSBs emerge unscathed in volatile market

Kolkata, Jan 22 Despite the drastic fall in stock market indices, the portfolios of the public sector banks remain protected. “We’ve well laid out system of managing our portfolios having exposure to both shares and mutual funds”, said a spokesman for a leading PSU bank. “We get out at what we call cut-loss and we do it in a systematic manner and avoid any loss”.

The spokesman gave several other reasons why the PSU banks would remain unscathed. The PSU banks being Government-owned have to pursue a prudent policy in matter of buying and selling of shares. The exposure of most banks would generally be limited.

They would never take over extended positions. The banks must follow the RBI’s guidelines in this regard. The RBI also closely monitored the portfolios of each bank. The banks were not allowed to operate in the secondary market. They would generally participate in the IPOs at a low price. Finally, the size of advances against shares too would not be large.

But what worried most banks was that the capital market might not be as vibrant as before, at least for some time to come, with the result the fate of some public issues might become uncertain. For the economy in general and the banking sector in particular to grow a vibrant capital market was necessary.

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