How do you read Assets to equity (leverage)?

Banks usually run 8 to 12 times. NBFCs, which must hold more capital, run 4 to 7 times. On the scale used here, below 7× reads as low, 7× to 12× reads as typical, and 12× and above reads as highly geared. Lower is usually better.

Assets to equity (leverage), explained

What is Assets to equity (leverage)?

How many rupees of assets a lender holds for each rupee of its shareholders' money.

Lending is a leveraged business by nature: a bank with equity of 10 lends 100. At ten times leverage, a 1% return on assets becomes a 10% return on equity, and a loss of 2% of assets wipes out a fifth of the shareholders' money.

Leverage is the simple, unweighted cousin of the capital adequacy ratio. It ignores how risky the assets are, which is also its use: it cannot be flattered by classing risky loans as safe.

How it is calculated

Assets to equity = total assets ÷ shareholders' equity. Return on equity = return on assets × this figure.

A worked example

Total assets of ₹1,00,000 Cr on equity of ₹10,000 Cr: assets to equity = 10 times.

Why does Assets to equity (leverage) matter?

It is the lender's gearing. Leverage multiplies a small return on assets into the return on equity, and multiplies losses the same way.

What is a good Assets to equity (leverage)?

Banks usually run 8 to 12 times. NBFCs, which must hold more capital, run 4 to 7 times.

Lower is safer. Read it with return on assets: a lender earning a strong ROA on modest leverage is a better business than one reaching the same ROE through heavy gearing.

Reading scale

In ×

Low

Typical

Highly geared

3×7×12×18×+

On the scale used here, below 7× reads as low, 7× to 12× reads as typical, and 12× and above reads as highly geared.

Lower is usually better.

What are the common mistakes with Assets to equity (leverage)?

Comparing banks and NBFCs on the same scale.

Welcoming a rising ROE that came only from rising leverage.

What is a typical Assets to equity (leverage) in India today?

The median across the 919 listed companies that report it, as of 12 Oct 2026. Half sit above each figure and half below.

By company size

Median

Large Cap · 27 companies6.17

Mid Cap · 33 companies5.94

Small Cap · 859 companies1.37

By industry

Median, largest industries first

Private Sector Bank · 209.21

Public Sector Bank · 1213.01

Non Banking Financial Company (NBFC) · 722.54

Investment Company · 411.12

Asset Management Company · 91.11

Holding Company · 121.79

Stockbroking & Allied · 321.82

Housing Finance Company · 133.96

Financial Technology (Fintech) · 131.47

Other Bank · 99.60

Compare a company with its own industry before the whole market. Every industry, and each company's rank within it, is in the screener.

Is this lender sound, and does it earn enough for the risk it takes?

A bank's raw material is other people's money, so the ratios that judge a factory misread it. These are the figures that matter for banks, NBFCs and housing finance companies: what they earn on lending, how many loans have gone bad, how well they are cushioned against losses, and how cheaply they fund themselves.