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Corporate Vulnerabilities in India and Banks' Loan Performance
Author:
Peter Lindner
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Sung Eun Jung
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Series:
IMF Working Papers
Volume/Issue:
Volume 2014: Issue 232
Language:
English
Publication Date:
19 Dec 2014
DOI:
https://doi.org/10.5089/9781498334235.001
ISBN:
9781498334235
ISSN:
1018-5941
Pages:
19
Keywords:
WP; Gross NPAs; bank; bank asset quality deterioration; India; IMF staff calculation; Financial crisis; firm resilience; bank-corporate dependencies; leverage; corporate performance; primary market equity issuance; return on equity; recapitalization cost; worsening performance; Commercial banks; State-owned banks; Public sector; Loans; Bank credit; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The financial performance of India's corporate sector has been under pressure since the Global Financial Crisis. Balance-sheet data on a large cross-section of Indian non-financial corporates show that the growth in their leverage over the last 15 years has been associated with a notable increase in the vulnerabilities of firms carrying high interest payment burdens. Gauged by the debt carried by the most vulnerable component of firms, the Indian corporate sector’s vulnerability to severe systemic shocks has increased to levels not seen since 2001. Progress on the macroeconomic front, together with improved credit appraisals and stricter impairment standards on the bank side, will be critical to help India's banks resume their role as economic growth drivers.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund