India's Twin Balance Sheet Woes Continue

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Banks resorted to a practice called evergreening which meant that they simply kept extending new loans to the crippled corporate sector. NPA's rose from a mere 4% in 2014 to over 11% by 2018. To get out of this we first needed to clean up the problem. Make sure there was no skeletons in the closet. The government stepped in between F5, 17 and F5, 21. It infused over 3 lakh crore rupees to strengthen PSB's. And it would spur a fresh round of lending. In 2021 we established a separate bank that would deal only in bad debts.

“India’s twin balance sheet problem is over. We now have a twin balance sheet advantage!”

That’s what Finance Minister Nirmala Sitharaman said a couple of days ago. And it’s the same thing that RBI Governor Shaktikanta Das said last month.

So in today’s episode for 6th July 2023, we explain what’s this twin balance sheet they’re talking about and whether the problem is really over. But before that, a quick sidenote, if you're a recruiter or you know someone who is a recruiter with about 4+ years of experience, Ditto is looking to recruit a Talent Acquisition Specialist (Recruiter). If you're interested or know someone who is please click this link - bit.ly/3NLyHaO