Over time, India has asked its banks to bear risks that, in more mature systems, are priced, traded, and distributed through markets. This has quietly overburdened bank balance sheets and made the financial system more fragile than it needs to be. Where markets can price and redistribute credit risk, banks lend selectively. Capital tied up in long-term corporate loans is capital that is not available to small firms, exporters or first-time borrowers. Without a deep bond market to distribute exposure across institutional and long-term investors, credit risk remains concentrated on bank balance sheets.

Source: The Hindu February 17, 2026 08:11 UTC