Corporate Vulnerabilities in India and Banks' Loan Performance

Author/Editor:

Peter Lindner ; Sung Eun Jung

Publication Date:

December 19, 2014

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 14/232

Subject:

English

Publication Date:

December 19, 2014

ISBN/ISSN:

9781498334235/1018-5941

Stock No:

WPIEA2014232

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

19

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