Fresh concerns for systemic stability must be monitored

The RBI is moving to implement changes in guidelines on Liquidity Coverage Ratio with higher runoff rates and haircuts

A reading of the Financial Stability Report (FSR) of June 2024 gives the impression that bank balance sheets are strong enough to withstand shocks. Lowest impairments in a decade, robust earnings and strong buffers have raised comfort levels. Governor Shaktikanta Das, in his foreword, assured the Reserve Bank of India (RBI) is watching emerging risks. The fact remains that the banking sector governance framework is still not in place, with the recommendations of the IMF’s FSAP of 2017 swept under the carpet. The government’s reluctance to divest majority ownership in public sector banks remains the big stumbling