India’s banking index, the Nifty Bank,hit a new record high on May 29th. There’s been a deleveraging of corporate balance sheets which has taken place in the recent years. The corporate debt to equity ratio for large listed companies is 0.6x, the lowest level in the last five years at the end of September 2022.
Large corporate borrowing seems imminent and that should take care of growth, both for the banks and the Indian economy, which is expected to be the fastest growing economy among the G20 countries in the next few years.
The recent growth in fixed capital is another encouraging sign. At the end of March 2023, fresh fixed capital, as a proportion of the GDP, rose for the first time in 15 years. As companies make fresh investments, banks are expected to witness a spike in credit growth.
India’s digital infrastructure has enabled the potential to assess credit, underwrite risk and establish recovery mechanisms, reducing the friction in distributing credit. Veteran banker, K.V. Kamath, in an interaction with CNBC-TV18 said,“Economic progress will take place via digital platforms. Technology cost is 10 to 20 percent of the original estimates. Five years from now, incremental economic contribution from digital will be around 20 to 25 percent.”
CNBC T V 18 says:
“India’s private sector has reduced its debt in the past ten years, a period when the rest of the world saw private sectors increasing leverage to take advantage of the prevailing low interest rates. The bad loans have declined considerably with improved regulatory oversight, re-capitalization of banks by the government, implementation of bankruptcy laws and progressive deleveraging by some of the stressed firms.”
Last updated: December 26th, 2025
