Second Quarter Review of Monetary Policy 2010-11
-Announced on the 2nd November 2010
Developmental and Regulatory Policies
59. The recent global financial crisis has underlined the need for fundamental changes in the way banks and financial institutions are regulated. Important steps in this regard at the international level have been taken under the auspices of G-20, Financial Stability Board (FSB) and Basel Committee on Banking Supervision (BCBS). The broad elements of emerging framework that have been agreed upon are ring-fencing of banking institutions with more and better quality capital under Basel III, an appropriate framework for systemically important financial institutions (SIFIs), aligning the compensation practices to prudent risk-taking and long term value creation, and improving the accounting standards, that promote financial stability. India being a member of G-20, FSB and BCBS, the Reserve Bank has been actively associated with the evolution of the reform package.
60. The thrust of the regulation by the Reserve Bank in recent years has not only been on strengthening the financial system, but also on developing financial markets, promoting financial inclusion, improving credit delivery, especially to the small and medium enterprises (SMEs) sector, improving customer service and strengthening the payment and settlement systems. The Reserve Bank, therefore, will continue to pursue reforms in these areas so as to enhance the efficiency and stability of the financial system.
61. A synopsis of the action taken on the past policy announcements together with a list of fresh policy measures is set out below.
I. Financial Stability
Financial Stability Report
62. The Reserve Bank conducts macro-prudential surveillance of the financial system on an ongoing basis. Assessment of financial stability and the findings thereof are shared with financial institutions, market players and general public in the form of Financial Stability Reports (FSRs). The first FSR was published in March 2010. The second FSR will be published in December 2010. Going forward, FSRs will be published in June and December every year.
Assessment of Financial Stability
63. Steps are being taken to strengthen macro-prudential surveillance. Towards this end, more frequent internal assessments, including systemic risk monitor reports twice a year, have started. As per the latest internal assessment, the financial system at the current juncture is largely stable. The banking sector is sound and the financial sector is considered resilient to shocks emanating from adverse domestic and international developments. However, evolving risks to financial stability, both globally and within the country, need to be monitored carefully on an ongoing basis.
Second Quarter Review of Monetary Policy 2010-11 ... click here
Highlights of 2nd Quarter Review of Monetary Policy 2010-2011... click here
RBI CREDIT AND MONETARY POLICIES (1999-2011)... click here