What are the four balance sheet problems?

The four balance sheet challenge includes challenges of 4 different sectors – real estate companies, Non-Banking Financial Companies (NBFCs), and the original two sectors viz., banks, and infrastructure companies. You can read about the Bad Banks – Idea Proposed by Indian Banking Association (IBA) Due to COVID-19 in the given link.

The four balance sheet problem was mentioned in a paper written by a famous economist, Arvind Subramanian. As per the author, normal structural reform agenda, fiscal policy, monetary policy cannot address the problem as the standard remedies are no longer applicable.

Further readings:

  1. RBI – Reserve Bank of India [UPSC Indian Economy Notes]
  2. Non Performing Assets (NPA) – Reasons, Classification, Impact, and Measures to Control NPA

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