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Causes, Consequences, Remedies

Twin Balance Sheet Problem

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Finance Minister Arun Jaitley’s budget proposed a measly ₹10,000 crore towards recapitalisation of public sector banks (PSBs). The budget thus steered clear of the biggest constraint to growth today: what the latest Economic Survey labels the “twin balance sheet (TBS) problem.”

India’s leading corporates have too much debt on their balance sheets; this keeps them from making fresh investment. Banks are weighed down by a mountain of bad loans; this comes in the way of credit growth. TBS impacts growth by affecting both the demand for credit and the supply of it.

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Updated On : 12th May, 2017

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