The IMF has said that a combination of weak banks and corporates have left India vulnerable to a tightening in the global financial conditions. The IMF further said that more steps were needed to ensure good capitalisation in public sector banks. A recent study, according to International Monetary Fund Financial Counsellor Tobias Adrian, showed that Indian banking sector was vulnerable given that large segments have low profitability and have large problem loans.
Commenting on the issue, IMF Financial Counsellor Tobias Adrian told the media, "We also found that Indian corporate remains highly leveraged and at high risks. So the combination of weak banks and weak corporates leaves India vulnerable to a tightening in global financial conditions.
" "More needs to be done to ensure that there is good capitalisation in public sector banks and also to implement further public-sector banking reform," he added. According to a Finance Ministry data, gross non-performing assets (NPA) of the public sector banks rose to Rs 6.41 lakh crore at the end of March 2017 as against Rs 5.02 lakh crore a year ago.