Central bank sets up financial stability unit

The Reserve Bank of India (RBI) has set up a financial stability unit (FSU) to conduct macro-prudential surveillance of the financial system on an ongoing basis.

The unit became operational from July 17, the central bank said in a release today. In its Annual Policy Statement for 2009-10, RBI had proposed to set up a FSU, drawing upon inter-disciplinary expertise from supervisory, regulatory, statistics, economics and financial markets departments for carrying out periodic stress testing and for preparing financial stability reports.

“The FSU will prepare financial stability reports and develop a database of key variables, which could impact financial stability, in co-ordination with the supervisory wings of RBI,” the release said.

The unit will also develop a time series of a core set of financial indicators models for assessing financial stability. In addition, it would conduct systemic stress tests to assess resilience, RBI said.

Co-op banks
The central bank has mandated the maximum quantum of housing loans that can be granted to an individual borrower by a state or central cooperative bank be revised to Rs 20 lakh. However, in case of a bank having a net worth of Rs 100 crore and above, the limit will be Rs 30 lakh. In addition, the aggregate of housing loans outstanding on any day against individuals, institutions, and societies should not exceed 10 per cent of total loans and advances of the bank as on March 31 of the preceding year.