Reserve Bank of India (RBI) Deputy Governor SS Mundra said banks may demand higher equity from companies that are highly leveraged before offering fresh loans to such firms.
"High leverage doesn't mean the company cannot be financed if there is a need. The only thing, for further financing the bank may demand them to bring higher equity to correct the leverage," Mundra told reporters on the sidelines of a press meet in Kolkata.
Banks may decide on the debt to equity ratio individually for companies, he added.
Mundra also said the central bank remains vigilant towards Indian companies issuing high-yield bonds overseas.