Altman Z-Score Distress Flags LICI, PSU Banks

-0.83. FairStock's Altman Z-Score screen flags Life Insurance Corporation of India ([LICI](/stock/LICI), NSE: LICI) at -0.83. Seven public sector banks sit between 0.33 and 0.37. The distress threshold is 1.8. The Altman Z-Score distress flags for LICI and PSU banks are a screening output, not a credit rating. The affected banks are [Central Bank of India](/stock/CENTRALBK), [Canara Bank](/stock/CANBK), [Bank of Baroda](/stock/BANKBARODA), [Punjab National Bank](/stock/PNB), [Bank of India](/stock/BANKINDIA), [UCO Bank](/stock/UCOBANK), and [Union Bank of India](/stock/UNIONBANK). FairStock's data attributes the low scores to high balance-sheet debt and modest return on capital employed. The Z-score formula penalizes both. Why the Altman Z-Score distress flag misfires for banks and insurers Altman Z-Score was built in 1968 for industrial companies. Banks and insurers do not look like industrial companies. They carry deposits and policyholder reserves as raw material. Interbank borrowings add more liability. The formula treats those liabilities as failure risk. That is a category error for financials. LICI's -0.83 reading reflects policyholder funds, not conventional borrowings. The company's solvency position is a separate question. Investors who sell LICI solely on a negative Z-score may be trading one narrow model against a different business model. The same applies to the PSU bank cluster. The original Z-score uses five balance-sheet and income ratios. None of them measure liquidity coverage or capital adequacy under Indian regulation. They also ignore policyholder persistency. Those are the metrics that matter for LICI and PSU banks. That is why the screen needs sector context. PSU bank cluster: 0.33 to 0.37 under pressure The seven banks share common features. Government ownership and corporate loan books keep scores low. Slower return on capital compounds the problem. [Bank of Baroda](/stock/BANKBARODA) and [Punjab National Bank](/stock/PNB) carry large...