For example, among all PSBs, larger PSBs like SBI and Bank of Baroda are trading at higher Price to Book Value ratio in comparison to other smaller PSBs. SBI has been able to maintain relatively strong capital ratios and appears to be in a better position to withstand shocks to asset-quality.
But business attitudes seem to be in the process of change - cash has started to decline and borrowing has picked up - so this topic is especially timely. Today, I will first provide a historical perspective on cash balances at corporations, and discuss some factors that may have encouraged firms to hold such large cash balances during this recovery.