RBI asks banks to remain watchful of the evolving macroeconomic situation

Reserve Bank of India Governor Shaktikanta Das advised banks to remain watchful of the evolving macroeconomic situation, including global spillovers, and take mitigating measures proactively so that the potential impact on their balance sheets is minimised and financial stability risks are contained.

Das made the aforementioned observations in a meeting on Wednesday with MD & CEOs of public sector banks and certain private sector banks.

It may be pertinent to mention that in his foreword to the June 2022 Financial Stability Report (FSR), Das had observed that the financial stability risks to the economy were skewed towards global spillovers and geopolitical tensions.

‘Nevertheless, the Indian financial system exhibits underlying robustness and resilience to withstand these shocks,’ he then said.

The systemic risk survey conducted by the Reserve Bank in May showed that global spillovers and financial market volatility had moved to the ‘high’ risk category.

Role of banks

In his introductory remarks at the meeting, the Governor acknowledged the crucial role played by the commercial banks in supporting the economic growth throughout the turbulent times since the outbreak of pandemic and the ongoing financial market turmoil.

He further stated that despite challenges, the Indian banking sector has remained resilient and continued to improve in various performance parameters.

Among other matters, issues relating to lagging growth in deposits vis-à-vis credit growth, asset quality, investments in IT infrastructure, adoption of new-age technology solutions, functioning of digital banking units, among others, were also discussed, per an RBI statement.

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