‘Take loans as much as you want and expand your empire’ – this seems to be the new corporate mantra. A study by CreditSights, affiliated with the credit rating agency Fitch warns about over leveraging. Indian corporates are investing less and depending more on loans and bonds. Though the study is more worried about bonds’ sustainability, what should worry us are our banks. Indian banks are so exposed to corporate loans – 45% of total loans – that if some of it goes bad it can bring down some banks.

Nevertheless, even PSU banks are getting more into the corporate loan business. They are closing branches, cutting down staff strength and diminishing their presence in the small loans sector, choosing corporates over people for more profit. But on doomsday, it will cost heavily.

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