Amid global shocks and challenges, the Indian economy presents a picture of resilience, said RBI Governor Shaktikanta Das on Thursday. In his foreword to the 26th Financial Stability Report (FSR) the governor said that the regulators remain vigilant and in readiness to ensure the stability and soundness of the financial system through appropriate interventions.
The central bank in its Financial Stability Report also said that banks’ gross NPA ratio has fallen to a seven-year low of 5 per cent and the banking system remains sound and well-capitalised.
The report noted that the global economy is facing formidable headwinds with recessionary risks looming large. The interplay of multiple shocks has resulted in tightened financial conditions and heightened volatility in financial markets.
“The Indian economy is confronting strong global headwinds. Yet, sound macroeconomic fundamentals and healthy financial and non-financial sector balance sheets are providing strength and resilience and engendering financial system stability,” the report said.
Das in his foreword said that food and energy supplies and prices are under strain, debt distress is staring at many emerging markets and developing economies, and every economy is grappling with multiple challenges.
“Amidst such global shocks and challenges, the Indian economy presents a picture of resilience. Financial stability has been maintained. Domestic financial markets have remained stable and fully functional. The banking system is sound and well-capitalised,” Das said.
Das said that going forward core issues of management of climate change, dealing with unanticipated and fresh shocks, if any, further strengthening the buffers of financial system, harnessing fintech innovations, and deepening financial inclusion will continue to receive priority attention from regulators and policymakers.
In 2023, India is well positioned to play a leading role on the world stage as part of its G20 presidency. The biggest challenge for G20 as a group is to reignite the efficacy of multilateralism, the governor wrote.
“The Reserve Bank and the other financial regulators remain vigilant and in readiness to ensure the stability and soundness of our financial system through appropriate interventions, whenever necessary, in the best interest of the Indian economy,” he added.