RBI's Annual Monetary Policy Statement for the Year 2012-13 -17th April 2012
I. Financial Stability
Assessment of Financial Stability
63. The fourth Financial Stability Report (FSR) was released in December 2011. According to the assessment made in the report, the domestic financial system remained robust, though risks to stability increased in the recent period. That the financial system remained robust was evidenced by a series of macro-financial stress tests, which assessed the resilience of the banking system to adverse macroeconomic developments. Stress tests also revealed that banks’ capital adequacy remained above regulatory requirements, even under severe stress scenarios.
64. The Reserve Bank instituted a systemic risk survey (SRS) to supplement its assessment of systemic risks through wider consultation. The findings of the SRS also reaffirmed the stability of the system. Over half the respondents were ‘confident’ or ‘very confident’ about the stability of the Indian financial system. However, according to the survey, deterioration in asset quality was identified as one of the major risks faced by banks.
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