The pursuit of financial stability has always been a policy priority in India and the Reserve Bank of India or RBI We will not hesitate to take whatever steps are required to maintain financial stability in the short, medium and the long-term, noted Shaktikanta Das, Governor of the central bank. The twin concerns of monetary and financial stability constitute the core objectives of the Reserve Bank. Similar to the global case, India also responded to the crisis by introducing changes in the existing institutional architecture to further the cause of financial stability, Das noted in the Inaugural Address by Shaktikanta Das, Governor, Reserve Bank of India Delivered at FIBAC 2019 - the Annual Global Banking Conference organised by Indian Banks' Association (IBA) and Federation of Indian Chambers of Commerce and Industry (FICCI).
In recent years, as a result of efforts by both the Reserve Bank and the Government, the overhang of stressed assets in the banking system has declined. Going forward, the macro-stress tests for credit risk conducted by the Reserve Bank indicate that under the baseline scenario, the GNPA ratio may decline further by March 2020. The NBFC sector complements the banking sector and aspires to act as the bridge to provide last mile connectivity.
Further, niche NBFCs fulfil the unmet and exclusive credit needs of infrastructure, factoring, leasing and other such activities. Non-traditional and digital players are now entering this space to deliver financial services by way of innovative methods involving digital platform. There is a web of inter-linkages of the NBFC sector with the banking sector, capital market and other financial sector entities. The Reserve Bank keeps a close watch on these inter-linkages to ensure financial stability. With a view to strengthen the sector, maintain stability and avoid regulatory arbitrage, the Reserve Bank and the Government have been proactively taking necessary regulatory and supervisory steps.
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