Altman Z-Score flags distress zone for LICI and 7 banks

On September 25, 2026, a FairStock.ai screen found the Altman Z-Score below 1.8 for LICI and seven NSE-listed banks. The list reads like a roll call of public sector finance: Central Bank, Canara Bank, Bank of Baroda, PNB, Bank of India, UCO Bank, Union Bank, and LICI. That 1.8 line is the historical distress zone Edward Altman set when he built the formula in 1968. It is a statistical tripwire, not a court order. Think of the Altman Z-Score as a company's credit report compressed into one number. The original formula adds working capital to assets, retained earnings to assets, operating profit to assets, market value of equity to liabilities, and sales to assets. A score below 1.8 says the balance sheet is stretched relative to historical failures. A score above 3.0 is safer. Between those two sits a grey zone. For public sector banks, a low score is common. They carry large loan books with thinner equity cushions than private banks. Their shares often trade below book value, which directly reduces the market value component of the Z-Score. So the distress-zone reading is partly a valuation signal: the market has already discounted these names. It is also a balance sheet signal. Deposit competition and bond yields have kept margins under pressure, and that pressure shows up in the formula before it shows up in a quarterly profit number. Altman Z-Score below 1.8: what the screen actually says The screen is a starting point, not a sell call. Altman's 1968 model was built for manufacturing companies. Banks and insurance companies have funding models that do not fit neatly. India's public sector banks use deposit liabilities and tier-1 capital in ways the original formula did not imagine. So a score below 1.8 at [Central Bank](/stock/CENTRALBK) or [UCO Bank](/stock/UCOBANK) means the market and the balance sheet are both saying the same thing: the margin of safety is thin. But the flag belongs in front of investors, especially when growth numbers look good. Loan g...