Indian firms’ low profits worry RBI
Banking stability indicator shows that risks to the banking sector increased since the publication of the previous FSR.
By : DC Correspondent
Update: 2015-12-24 01:11 GMT
Mumbai: Reserve Bank of India on Wednesday stressed on the need for a continuous thrust on structural reforms and on improving the ease of doing business to attract robust capital flows to finance the current account deficit.
According to the 12th Financial Stability Report and the statutory report on trend and progress of banking in India 2014-15 released by RBI on Wednesday, the ratio of short-term external debt to forex reserves has been moderating.
In the report, RBI has also expressed concern at the declining profitability, high leverage and low debt servicing capacity of the corporate sector, with their attendant adverse impact on the financial sector, notwithstanding a marginal improvement observed during the first half of current fiscal.
The banking stability indicator shows that risks to the banking sector increased since the publication of the previous FSR, mainly on account of deteriorating asset quality and low profitability.
However, the RBI report added that the Indian economy appeared quite resilient, given a modest recovery in the economy, declining inflation and buoyant capital flows that helped in maintaining the external sector balance.
Download the all new Deccan Chronicle app for Android and iOS to stay up-to-date with latest headlines and news stories in politics, entertainment, sports, technology, business and much more from India and around the world.