RBI's FSR says higher G-Sec and SGS supply and softer demand from insurers and pension funds are keeping long-term yields elevated even as short rates fall on easing and liquidity
RBI stress tests suggest some banks may need to draw on capital conservation buffers under adverse macro conditions, though minimum capital norms are likely to remain intact
RBI says NBFCs' higher foreign currency borrowing has helped steady funding costs, but it raises vulnerability to exchange rate volatility even with most exposure hedged
The report noted that rise in interest rates has benefited banks by improving their net interest margins, with a faster transmission to yield on assets compared to the cost of funds
According to RBI's financial stability report, the total of SMA-0, SMA-1 and SMA-2 in the retail advances in the public sector banks was 9.4% as of March 31
The Reserve Bank bulletin has released some of its key findings on the state of the economy, weather events, Opec oil supply, financial literacy, and retail credit trends
The RBI, according to bankers, is concerned that the sharp rise in interest rates could trigger defaults and pose more risk. The RBI did not reply to an email requesting comment
According to RBI's Financial Stability Report, June 22, share of large borrowers, those having aggregate fund and non-fund based exposure of Rs 5 crore and above, has been declining in recent years
Big techs can scale up rapidly and pose risk to financial stability, which can arise from increased disintermediation of incumbent institutions, it noted.
The ferocity of the second wave of Covid-19 has dented economic activity, but monetary, regulatory and fiscal policy measures have helped stabilise markets, and maintain financial stability, says FSR
More than banks, most of which have the balance sheet strength to stomach bad loans, it is the borrowers who will suffer once they are branded as defaulters since no lender will give them fresh money
