Public sector banks made a determined effort to spread their risks among more borrowers during the last fiscal. Earlier they lent more to a few top borrowers. Now, they have reduced the proportion of loans they have given to their top 20 borrowers.

State Bank of India, for instance, cut down the loans it gave to its top 20 borrowers by almost two-thirds to Rs 65,236 crore in 2011. The proportion of its top 20 borrowers to total loans dropped steeply from nearly 30 per cent to about 8.45 per cent during the last one year.

Some other public sector banks, including Bank of Baroda, Punjab National Bank, Union Bank and Oriental Bank of Commerce, brought down their proportion of top borrowers by a more moderate percentage, even if the absolute amounts showed a slight increase.

Attempt at de-risking

Banks have made a similar attempt to de-risk their liabilities side too during the last fiscal. They did this by reducing the concentration of their top 20 depositors in the last fiscal, by lesser recourse to bulk deposits.

Banks generally do not say no to either large depositors or large borrowers, simply because it makes good business sense to service fewer customers and make more money on them.

However, they are also watchful that this could lead to cornering of resources by a few and lead to consequent concentration risks. Risk management committees monitor such exposure at regular intervals. So, periodically, banks rebalance their portfolio both on the liabilities and assets sides.

Private sector banks, with the exception of ICICI Bank, seem to have increased or at least maintained their proportion of large loans to total loans.

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