Sustaining banking stability

Governance gaps must be avoided

One of the necessary conditions for attaining higher sustainable economic growth is financial stability. While risks to financial stability can emerge from a number of areas, it is important to maintain banking sector stability at all times. Since the Indian financial system is dominated by banks, the health of the banking system is also a key determinant in channelling financial savings. Further, as the system is dominated by public sector banks (PSBs), potential instability can have implications for government finances. It is also worth noting that the need for both internal and regulatory vigilance has increased tremendously because of technological