Mumbai, With studies showing improvements in asset quality and resilience to withstand stress scenarios, Reserve Bank Governor Shaktikanta Das on Thursday asked stakeholders in the financial system to assign "highest priority" to governance.
"Top priority must be given to governance: strong governance is at the core of the resilience of stakeholders in the financial system," the governor said in his foreword to the semi-annual Financial Stability Report released by the central bank.
The report highlights strengthening balance sheets of financial institutions with low impairment levels, solid profits and strong reserves, he said, adding that RBI's stress tests show that even in severe stress scenarios, bank and non-bank reserves will They will maintain above minimum levels of regulatory capital.
"Today, the financial stability matrix may be at its best, but the real challenge is to maintain and improve it further," he said.
In the "stable environment", the RBI is alert to emerging risks arising from cyber dangers, climate change and global spillovers, Das said.
He also called on banks to invest appropriately on the technological front and affirmed the central bank's commitment to promoting innovation.
"New technologies offer improvements in efficiency and customer experience, but can also bring with them sudden and widespread disruptions in the financial system. This requires that all stakeholders not only invest appropriately to take full advantage of technological advances, but also take action to safeguard the security and robustness of their systems," he stated.
He also called for customer interests to be put at the forefront, noting that preserving customer trust is the cornerstone of safeguarding systemic stability.
Amid global headwinds, the Indian economy is showing strength and resilience with strong fundamentals and macroeconomic buffers, Das noted.
He said economic activity is expanding at a steady pace and the financial system is stronger and more vibrant than before the start of the recent crisis period.
The RBI's approach of balancing growth and stability with a willingness to take proactive and prudent measures to avoid risk accumulation is promoting "long-term resilience and stability of the financial system", the governor added.
"It is vital that we consolidate these achievements and foster a financial system that is future-proof and supports the needs of India's growing economy," Das said, adding that with India's growing contribution to global growth, there is a need for deepen and modernize the financial system.
He said the risks of a hard landing for the global economy have diminished, even though progress on disinflation has been slow.
In the foreword, the governor reiterated some of his concerns, stating that "alarming levels" of public debt represent a significant risk to the global financial system, along with frequent geopolitical conflicts, climate change and the risks emanating from the adoption of financial technologies.
"Top priority must be given to governance: strong governance is at the core of the resilience of stakeholders in the financial system," the governor said in his foreword to the semi-annual Financial Stability Report released by the central bank.
The report highlights strengthening balance sheets of financial institutions with low impairment levels, solid profits and strong reserves, he said, adding that RBI's stress tests show that even in severe stress scenarios, bank and non-bank reserves will They will maintain above minimum levels of regulatory capital.
"Today, the financial stability matrix may be at its best, but the real challenge is to maintain and improve it further," he said.
In the "stable environment", the RBI is alert to emerging risks arising from cyber dangers, climate change and global spillovers, Das said.
He also called on banks to invest appropriately on the technological front and affirmed the central bank's commitment to promoting innovation.
"New technologies offer improvements in efficiency and customer experience, but can also bring with them sudden and widespread disruptions in the financial system. This requires that all stakeholders not only invest appropriately to take full advantage of technological advances, but also take action to safeguard the security and robustness of their systems," he stated.
He also called for customer interests to be put at the forefront, noting that preserving customer trust is the cornerstone of safeguarding systemic stability.
Amid global headwinds, the Indian economy is showing strength and resilience with strong fundamentals and macroeconomic buffers, Das noted.
He said economic activity is expanding at a steady pace and the financial system is stronger and more vibrant than before the start of the recent crisis period.
The RBI's approach of balancing growth and stability with a willingness to take proactive and prudent measures to avoid risk accumulation is promoting "long-term resilience and stability of the financial system", the governor added.
"It is vital that we consolidate these achievements and foster a financial system that is future-proof and supports the needs of India's growing economy," Das said, adding that with India's growing contribution to global growth, there is a need for deepen and modernize the financial system.
He said the risks of a hard landing for the global economy have diminished, even though progress on disinflation has been slow.
In the foreword, the governor reiterated some of his concerns, stating that "alarming levels" of public debt represent a significant risk to the global financial system, along with frequent geopolitical conflicts, climate change and the risks emanating from the adoption of financial technologies.
