Altman Z-Screen Flags Eight Financials in Distress Zone

Altman Z-Screen flags eight Indian financials The Altman Z-Screen has placed eight Indian financial names below the 1.8 distress threshold as of September 17. [LICI](/stock/LICI) (NSE: LICI) sits at the bottom with a Z-score of -0.83. [Central Bank of India](/stock/CENTRALBK) (NSE: CENTRALBK), [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) all screen between 0.33 and 0.37. That cluster looks alarming on a standalone basis. The conventional Altman Z-Score treats scores below 1.8 as a distress zone. But applying a manufacturing-era solvency model to deposit-funded banks and insurers creates distortions. These companies run large liability books by design. Their working capital and retained earnings metrics don't behave like an industrial firm's. Why the Altman Z-Score is blunt for banks and insurers The Z-score formula punishes businesses that fund assets with customer deposits or policyholder liabilities. [LICI](/stock/LICI) is a life insurer, not a defaulting manufacturer. Its -0.83 reading mostly reflects a balance sheet built on long-duration policyholder obligations. Its solvency ratio may still sit above the regulatory minimum. For policyholders, the negative Z-score does not mean claims go unpaid. The score also uses market value of equity relative to total liabilities. PSU bank equity often trades below book value. That mechanically pushes the Z-score lower, even if the bank's capital adequacy ratio is comfortable. PSU banks carry large government bond portfolios and infrastructure loans. Their liability side is dominated by deposits. When interest rates shift, the market value of those bond holdings adjusts. A Z-score can dip without any change in credit quality. If bond yields rise further, expect the scr...