India Inc Could Face Debt Problem: Study

Washington, April 29 | Updated: Apr 30 2004, 05:30am hrs
India Inc could face problems in repaying their debts, posing risks to lenders, who will have to strengthen their monitoring of growing non-performing assets, warns an International Monetary Fund (IMF)working paper.

An examination of balancesheets of Indian companies suggests that an increasing number of firms could face the problems of servicing debt obligations, which may pose some risk to lenders, the paper titled Overview of the Indian corporate sector 1989-2002 said here.

By several measures, the countrys companies had become relatively less liquid in the 1990s, it said, adding interest coverage ratio defined as earnings before interest, taxes, depreciation and amortisation has dipped in the recent years, suggesting that Indian companies might be facing increased strain in meeting their debt service obligations.