Indian banks: the world’s weakest link

Out of all the banking sectors in major economies, India’s warrants the most concern. It came into the crisis in the worst shape, and the scale of damage to private balance sheets means it will be one of the hardest hit from rising Policymakers are unlikely to allow any systemically important bank to fail. But the sector is entering a slow-burning crisis, where bad debts will eat into profits and restrict lending, holding back the recovery throughout the decade. Fortunately, any global spillovers should be small.