Stressed banking sector, leveraged firms might drag down growth: RBI

Stressed banking sector and leveraged corporate balance sheets might block the country's economic growth, says the Reserve Bank of India (RBI).

Its biannual Financial Stability Report (FSR), issued on Friday, says investment demand remains weak.

The six-monthly report reviews macro economic conditions and the financial sector. This one says the domestic outlook remains positive, with macro economic stability. Liquidity conditions remain easy. The current account deficit remains contained. And, expectations of accelerated reforms and political stability reinforce the economic outlook. There is also optimism on global economic prospects, after years of sluggish growth.

Yet, the FSR said, dilemmas seem to continue on normalisation