In scenarios of severe stress, the ratio may jump to as high as 11.2% by March 2018, the report said. For public sector banks, the gross bad loan ratio could touch as high as 14.2% by March 2018. Capital adequacy ratio is an indicator of a bank’s financial strength, expressed as the ratio of capital to risk-weighted assets. The FSR is a twice-a-year report prepared by a department of the RBI and endorsed by a sub-committee of the Financial Stability and Development Council. “Weak investment demand, partly emanating from the twin balance sheet problem (a leveraged corporate sector alongside a stressed banking sector) is a major challenge,” RBI deputy governor N.S.

Source: Mint June 30, 2017 14:37 UTC