Consider the following statements with reference to the Twin Balance Sheet TBS Problem in the contex...........

Economic Affairs Types of Banks and Banking

Consider the following statements with reference to the Twin Balance Sheet (TBS) Problem in the context of Indian Economy:

1.It signifies the lack of capacity of the private sector in investing in green field projects.

2.It has led to relatively increased credit facilitation by Non Banking financial Companies.

3.The ongoing strategic Debt Restructuring Scheme (SDR) of RBI aims to tackle the TBS problem.

How many of the statements given above are correct?

Only One

Only Two

All Three

None

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Explanation:

1 and 2 only

Signifying the lack of capacity of the private sector in investing in greenfield projects: The Twin Balance Sheet (TBS) problem in the context of the Indian economy primarily refers to stress on both the banking sector's balance sheets (due to non-performing assets) and the corporate sector's balance sheets (due to high leverage). It does not specifically signify the lack of capacity of the private sector in investing in greenfield projects.

Increased credit facilitation by Non-Banking Financial Companies (NBFCs): The TBS problem has led to an increased credit facilitation by Non-Banking Financial Companies (NBFCs) as they stepped in to provide credit when traditional banks faced challenges. This statement is correct.

Ongoing Strategic Debt Restructuring Scheme (SDR) of RBI: The Strategic Debt Restructuring (SDR) scheme was introduced by the Reserve Bank of India (RBI) to address stressed assets in the banking sector. While it is a measure to tackle the issue of stressed assets, it is not specifically aimed at addressing the Twin Balance Sheet problem.

Therefore, the correct answer is 1 and 2 only.