What happens if you overcompensate with 20mF capacitor for the inductive circuit instead of 10mF capacitor which already satisfy the power factor to reach 0.95?

there would be no problem with this == == The inductive circuit has a 'lagging' power factor. If you over-compensate with too much capacitive reactance, you could go over the top (past 1.0) , and end up with a leading power factor that may even be numerically worse than when you started.

== == == ==