Tightening the ship: pandemic forces companies to indulge in significant deleveraging activity

With the onset of the pandemic, FY21 has been an outlier in India’s financial system. The environment for bank credit remained subdued in the midst of the pandemic, with credit supply muted by persisting risk aversion and restrained loan demand. The growth in bank credit, which started slowing down in FY20, was further impacted during H1FY21 due to pandemic-related restrictions and stood at 5.1% for October 2020 – the lowest since May 2017.

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