Indian banks will be able to maintain capital adequacy even in severe distress: RBI Gov Das

Reserve Bank of India Governor Shaktikanta Das said that Indian banks are resilient and will maintain capital adequacy even in times of severe distress. Das was addressing the Global Conference on Financial Resilience. 

Das said that stress tests show that Indian banks will be able to maintain capital adequacy above minimum requirement even in a situation of severe distress. “The Indian banking system has remained resilient and has not been impacted adversely by the recent sparks of financial instability seen in some advanced economies,” said the RBI Governor.

He added that the central bank is committed for future proofing of the Indian financial system, and to provide support for its sustainable growth. Das, however, stated that financial sector surprises can spring at any time, and urged stakeholders to be watchful. 

Das’ remarks come weeks after the Silicon Valley Bank and Signature Bank blowout that led to distress in the financial sector in the US and Europe. 

He also said that banks need to be organisationally resilient rather than having an aggressive growth strategy. The Governor also suggested banks and financial bodies to remain engaged with external auditors. 

Shaktikanta Das added that banks and its management must continuously assess financial risks and build buffers beyond the minimum regulatory requirement. 

Governor Das said that RBI has put various frameworks in place and also deploys macroprudential measures to assess the buildup of risks. He said that the RBI has started looking more closely into the business models of banks. 

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