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India Inc's Unsustainable Debts A Serious Worry: RBI

By Religare

The RBI has said that some of the corporates have raised unsustainable amount of debt from various sources, including banks and overseas financial institutions, without showing any regard to domestic and global demand situation.

India Inc's Unsustainable Debts A Serious Worry: RBI
Commenting on the issue, RBI Deputy Governor S S Mundra told the media, "Corporate sector leverage has currently become an issue of a great concern for the economy in general and banking system in particular. In the lead up to the crisis and even beyond, some of the Indian corporate houses raised unsustainable amounts of debt from various sources, including bank finance and oversees borrowings."

"As we notice now, several indiscriminate corporate houses continued market borrowing with a view to increase their market share and to expand capacity without any regard to domestic and global demand situation," he added.

The RBI Deputy Governor further added that banks needed to improve their productivity, efficiency, make a quantitative assessment of revenue streams and put in place a robust transfer-pricing mechanism for efficient capital allocation.

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