RBI Releases December 2018 Financial Stability Report
RBI Releases December 2018 Financial Stability Report
RBI Releases December 2018 Financial Stability Report
The Reserve Bank of India today released the eighteenth issue of the
Financial Stability Report (FSR). The FSR reflects the collective assessment of the
Sub-Committee of the Financial Stability and Development Council (FSDC) on risks
to financial stability, as also the resilience of the financial system. The Report also
discusses issues relating to development and regulation of the financial sector.
India’s financial system remains stable, and the banking sector shows signs of
improvement, even though the global economic environment and the emerging
trends in financial sector pose challenges.
• The global growth outlook for 2018 and 2019 remains steady although the
underlying downside risks have risen.
• Spill-over risk to emerging economies engendered by tightening of financial
conditions in Advanced Economies, protectionist trade policies and global
geopolitical tension has significantly increased.
• The gradual monetary policy normalisation in advanced economies (AEs) as
also the uncertainty in global trade regime may adversely affect capital flows
to emerging markets (EMs) and exert upward pressure on EM interest rates
and corporate spreads.
• On the domestic front, growth of gross domestic product (GDP) showed slight
moderation in Q2:2018-19 while inflation remains contained.
• In domestic financial markets, structural shifts in credit intermediation and the
evolving interconnectivity between banks and the non-banks call for greater
vigilance.
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• Analysis of the financial network structure for the period September 2017 -
September 2018 reveals a shrinking inter-bank market and increasing bank
linkages with asset management companies-mutual funds (AMC-MFs) for
raising funds and with NBFCs/Housing Finance Companies (HFCs) for
lending.
Ajit Prasad
Press Release : 2018-2019/1504 Assistant Adviser