RBI Governor Shaktikanta Das on Thursday said there is a renewed focus on the resilience and stability of the financial sector, and a resilient future-ready bank needs to be financially, operationally and organisationally resilient. He also said the Indian banking system remains resilient, and stress tests show Indian banks will be able to maintain capital adequacy above minimum requirement even in the situation of severe distress.
“The financial sector in a country and the individual entities therein like banks, NBFCs, have to be resilient at all times. They should have the inner strength to withstand even the most stressful times,” the RBI governor said on Thursday while addressing the ‘Global Conference on Financial Resilience’, which was organised by RBI-promoted College of Supervisors in Mumbai.
He added that the RBI has significantly strengthened its supervision and regulations of banks and other regulated entities in recent years. The central bank’s approach has been to enhance resilience as well as the robustness of the financial sector, so that individual entities effectively withstand stressful situations and continue to contribute to the process of the economic development of the country.
Das also said, “The Indian banking system has remained resilient and has not been affected adversely by the recent sparks of financial instability seen in some advanced economies.”
He also said stress tests show Indian banks will be able to maintain their capital buffers above the minimum requirements even in the case of the most distressing of events.
He, however, said that financial sector surprises can come from anywhere at a time when participants world over are adopting unconventional policies, and urged the stakeholders to be watchful.
Various banks in the US and Europe have been facing a crisis, with two banks including Silicon Valley Bank and Signature Bank in the US having failed. Another US-based lender First Republic Bank is struggling to survive.
The RBI is committed to future-proofing of the Indian financial system and to providing support for its sustainable growth, Das said.
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