Overview of the Indian Corporate Sector: 1989-2002
IMF Working Papers, April 1, 2004
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- Overview of the Indian Corporate Sector: 1989-2002
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Bibliographic details
- Authors: Petia Topalova
- Published: April 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451848595.001
Summary findings
- Uses firm-level data to examine performance of India's nonfinancial corporate sector since 1989 and evaluate financial vulnerabilities.
- Promising trends in liquidity, profitability, and leverage emerged in the early 1990s.
- Trends experienced a reversal after 1996.
- Most indicators were still at comfortable levels despite the reversal.
- Evidence of improvement in 2002, the last year in the sample.
- A number of firms still face problems servicing their debt obligations, posing a risk to lenders.
- The aggregate interest coverage of the corporate sector indicates that potential nonperforming loans of the corporate sector remain high.
- Conclusion: underscores the need for close monitoring of the corporate sector in the future.
Financial vulnerabilities and risk signals
- Persistent debt-servicing problems for a subset of firms.
- High potential nonperforming loans as signaled by aggregate interest coverage.
- Reversal of earlier improvements after 1996, despite overall comfortable indicator levels.
Policy implications and recommended actions
- Close monitoring of the corporate sector going forward to track debt-servicing capacity and nonperforming loan risks.
- Attention needed from lenders and financial sector supervisors to address firms with debt-servicing difficulties.
Publication and metadata
- Author: Petia Topalova
- Date: April 1, 2004
- Series: Working Paper No. 2004/064
- Issue: 064
- Volume: 2004
- Pages: 41
- DOI: https://doi.org/10.5089/9781451848595.001
- ISBN: 9781451848595
- ISSN: 1018-5941
- Subjects: Commercial banks; Corporate governance; Corporate sector; Economic sectors; Financial institutions; Financial markets; Nonperforming loans; Stock markets
- Keywords: Asia and Pacific; board of directors; Commercial banks; companies increasing; company; company transaction; Corporate governance; Corporate sector; experience difficulty; government company; indebted company; Indian corporate sector; Indian financial sector; Interest coverage; long-term debt; Nongovernment company; Nonperforming loans; private company; public sector company; Stock markets; WP
Source: Overview of the Indian Corporate Sector: 1989-2002, IMF Working Papers 2004/064.