Altman Z-Score Flags LIC, 7 Indian Banks in Distress

October 14, 2026 gave Indian equity investors an uncomfortable screen. Eight NSE-listed names now sit below the 1.8 Altman Z-Score threshold, the line associated with elevated balance-sheet distress risk. [LICI](/stock/LICI) (NSE: LICI) is at -0.83. [Central Bank of India](/stock/CENTRALBK) (NSE: CENTRALBK) is at 0.33. The rest are mostly public sector banks. The affected NSE tickers include [Canara Bank](/stock/CANBK) (NSE: CANBK), [Bank of Baroda](/stock/BANKBARODA) (NSE: BANKBARODA), [Punjab National Bank](/stock/PNB) (NSE: PNB), [Bank of India](/stock/BANKINDIA) (NSE: BANKINDIA), [UCO Bank](/stock/UCOBANK) (NSE: UCOBANK), and [Union Bank of India](/stock/UNIONBANK) (NSE: UNIONBANK). This screen is a balance-sheet risk flag, not a standalone verdict. The Altman Z-Score was built for industrial companies. Banks and insurers carry liabilities as operating raw material, so the formula treats customer deposits and policyholder funds as financial stress. That is a flaw when applied mechanically. It is also a signal. A weak score means the market value of equity and retained earnings are not doing enough to offset the liability side. The global backdrop makes the signal harder to ignore. US rates remain elevated enough to compete with emerging market equities. Crude oil prices have stayed above $90 for most of 2026, keeping pressure on India's current account and rupee. When foreign institutional investors reduce risk, low Z-score names are often among the first to face selling, even if the underlying franchise is stable. That is the market event to analyze. What the Altman Z-Score Is Flagging in the Bank Basket Public sector banks dominate this list for a reason. Their gross advances typically run eight to ten times their net worth. That is normal for a bank, but it pushes the debt-to-equity ratio far above what a manufacturing company would carry. Low single-digit P/E multiples, a structural feature of this group, also suppress the market value of equity that fee...