New Delhi

The Reserve Bank of India's half-yearly report for risk assessment in the financial sector presents a collective assessment of the stability of the global & India's financial system.

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On global macro-financial risks, the report highlights 'resilience amid heightened risks and uncertainties'. While short-term economic indicators point to a significant improvement, the report also highlights the challenges. Issues of high public debt, geopolitical tensions, stretched asset valuations, economic fragmentation, climate disasters, & cyber threats plague the global economic outlook. Emerging market economies remain vulnerable to these external shocks.

On domestic macro-financial risks, the report reiterates India's growth story. Strong fundamentals and a stable financial system have boosted India's economic outlook. Business and consumer sentiment outlook is also optimistic, with moderation inflation and ongoing fiscal consolidation. Financial institutions boast of healthy balance sheets, marked by strong capital buffers, improving asset quality and robust earnings.

On the resilience of financial institutions, the report highlighted Scheduled commercial banks (SCBs), that have been boosted by rising profitability and declining non-performing assets. Return on assets(ROE) & Return on equity (ROE) are close to decade highs at 1.3 per cent and 13.8 per cent, respectively. The consolidated solvency ratio of the insurance sector remains above the minimum threshold limit of 150 per cent. 

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On regulatory initiatives in the global financial sector, the report highlights a focus on recent initiatives aimed at safeguarding the banking system from inter-connectedness. Meanwhile, domestic regulatory initiatives are also focused on ensuring safety and resilience.