According to the stress test undertaken by the RBI to assess the interconnectedness of Indian banks with the ongoing global banking crisis, no Indian bank’s capital will fall below the threshold even in case of a contagian impact.
“We do what is called this solvency contingent analysis, which we recently revisited, and we find that if we take the NBFCs with the maximum potential to cause losses and there is a idiosyncratic failure of those NBFCs, there will be losses to the banking system, but no bank will go below the minimum capital requirement,” said Deputy Governor Michael D Patra.
The central bank has issued guidelines to banks to use various scenarios to stress test their balance sheets, factoring in multiple parameters, which are done as a regular exercise, said Deputy Governor MK Jain.
No further instructions have been given to banks in the wake of the global crisis, as these tests already include factors such as interest rate risk in the banking book, he added.
Governor Shaktikanta Das said the RBI will be discussing the “the recent incidents of stress in the banking sector” in some advanced countries such as the US and Switzerland in the upcoming G20 meeting.
The G20 meetings of Finance ministers and central bank governors will be held in Washington DC, prior to the International Monetary Fund’s spring meetings.
and The other points of discussion will be making non-banking financial intermediaries more resilient, financial risks from climate change and the need for climate finance, micro financial risks from crypto assets or cryptocurrencies, managing risks from third-party dependencies, including Big Tech and fintech, enhancing cross-border payments, better reporting of cyber incidents, and issues relating to financial inclusion, said Das.