economics medium True/False

The 'Twin Balance Sheet' problem in the Indian economy refers to the simultaneous over-leveraging of corporate houses and the massive accumulation of Non-Performing Assets (NPAs) by commercial banks.

  1. True
  2. False

Answer: True

Coined in the mid-2010s, the Twin Balance Sheet problem severely stalled private investment and credit growth in India. Corporates were burdened with heavy debt from past infrastructure booms and could not invest further, while banks, choked by bad loans from these same corporates, became risk-averse and stopped lending, creating a severe macroeconomic bottleneck.

Topic Indian Economy - Contemporary
Exam Relevance UPSC Prelims, Banking, SSC
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