Balance Sheet Revival Has Made Indian Firms a Growth Engine: RBI Study

RBI report for 2025 shows stronger corporate profits, lower debt, and slowing NRI deposit inflows.

In 2020, many Indian companies were buried in debt, profits were shrinking, and lenders were nervous. Five years later, the tone is different. The Reserve Bank of India’s Corporate Sector Performance Report 2025 says firms have steadied their balance sheets and cut their borrowings.

Sales growth hit 32.5 per cent in FY 2021–22 during the rebound after COVID-19. By FY 2024–25, it eased to 7.2 per cent, a sign that companies are settling into steady growth. The same report notes profit margins are improving, and the overall debt-to-equity ratio has dropped.

But the picture isn’t all smooth. The India Foreign Currency Deposit Report 2025 shows a decline in NRI deposit inflows. Many overseas Indians are parking money in higher-yield accounts abroad. That shift could tighten foreign currency liquidity if it continues.

What the RBI Report Reveals About Profits and Debt in 2025?

The RBI defines a “balance sheet revival” as firms paying off loans, earning higher profits, and managing interest payments better.

Between FY 2020–21 and FY 2024–25, total profits of listed non-financial companies rose from ₹2.5 trillion to ₹7.1 trillion. Debt-to-equity improved to 45.2 per cent, and interest coverage climbed to 4.1.
 

The numbers sound good. Yet, new project spending by private firms fell about 6 per cent in FY 2024–25. It shows companies are cautious, preferring to repair balance sheets before expanding.

Why Corporate Growth Has Slowed but Become More Stable?

The RBI data on NRI deposits paints a quieter shift. Total NRI deposits stood at USD 142 billion by mid-2025, down from USD 144 billion in December 2024. The RBI statistics on overseas deposits link this to interest rate gaps and a stronger U.S. dollar.
 

If this continues, the fall in foreign currency deposits could slow liquidity growth, affecting bank funding for large projects later this year.

How the Government and Banks Are Keeping Growth on Track

The government is keeping public capital spending high to maintain steady growth. Meanwhile, banks are also changing: non-bank routes such as bonds and NBFCs accounted for nearly 50 % of corporate funding in FY 2024-25, according to the RBI report. This offers a safety cushion against slower deposit growth.

As LoansJagat explains in “HUDCO: Sanctioning More Loans Than Banks? Truth or Myth”, these shifts in the funding mix, more bonds, more NBFCs, show how banks and governments are adapting to a changing credit industry.

Conclusion 

Indian firms are stronger than they were five years ago. Debt is lower, profits are up, and risks look more contained. But the decline in NRI deposit inflows reminds policymakers that external money still matters. 

The RBI’s Corporate Sector Performance Report 2025 and India foreign currency deposit report together show one thing clearly: domestic strength is rising, but external flows will decide how fast the next growth cycle begins.