One key threat to a nation’s financial stability is the level of corporate leverage. That fear is coming home to roost for many Indian banks. The combined debt to equity ratio of BSE 500 firms was 1.28 times at the end of the financial year up from 0.9 times five years earlier. With an economic slowdown biting into earnings, the debt servicing capability of firms has also come down as other yardsticks such as the interest coverage ratio show.
