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Twin-Balance Sheet problem

Twin-Balance Sheet problem upsc notes
Context
Finance Minister Nirmala Sitharaman's statement
Indian economy has twin-balance sheet advantage
Source: TH
What
Both banks and corporates face financial distress
High amount of non-performing assets (bad loans) (NPA)
NPA of public sector banks was 12% in 2016-17
Corporates have accumulated excessive debt
RBI's Financial Stability Report
Banking and corporate sector balance sheets have strengthened
India might have twin balance sheet advantage
Gross NPA ratio at 10-year low of 3.9%
Corporate balance sheet healthiest in 10 years
Profitability of public sector banks tripled since 2014
Reached over ₹1 lakh crore in 2022-23
Government initiatives
4R strategy (Recognizing, recapitalizing, resolving, reforming)
Central Repository of Information on Large Credits (CRILC)
Banks share information on large loans
Insolvency and Bankruptcy Code, 2016
National Asset Reconstruction Company (NARCL)
To handle bad debt

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