New Delhi, Mar 25 (KNN) The twin balance sheet problem no longer persists in the Indian economy, Minister of State (MoS) for Finance Pankaj Chaudhary informed in the Lok Sabha.
Twin balance sheet problem refers to a situation when banks are over-stressed and corporates are overleveraged to the extent they find it difficult to repay loans.
In a written reply in the Lower house of the Parliament, the MoS Finance stated that the balance sheets of both banks and corporates are currently in a healthy position.
The Gross Non-Performing Assets (GNPA) ratio of Scheduled Commercial Banks has declined to a multi-decade low of 2.2 percent as of September 2025, indicating improved asset quality.
Banks are well-capitalised and profitable, while the corporate sector
has shown stronger financial performance.
Citing data from the Reserve Bank of India, he noted that aggregate corporate profits of listed companies have risen significantly from around Rs 2.5 trillion in 2020–21 to Rs 7.1 trillion in 2024–25. This improvement has supported sustained credit growth and increased investment activity in the economy.
Policy Measures Driving Balance Sheet Strength
The Minister further highlighted that a series of policy measures undertaken by the government and the RBI have contributed to strengthening balance sheets.
These include the implementation of the Insolvency and Bankruptcy Code (IBC), the Asset Quality Review conducted by the RBI for transparent recognition of stressed assets, and the establishment of the National Asset Reconstruction Company Limited (NARCL) to resolve legacy stressed assets.
Additional steps such as recapitalisation of public sector banks and the introduction of governance and operational reforms have also played a key role in improving the overall health of the banking and corporate sectors, the Minister added.
(KNN Bureau)
