India (Common Wealth) _ Governor of the Indian Reserve Bank Shaktikanta Das emphasized that despite the crisis affecting US banks, the Indian financial system is still strong and stable. Speaking in Kochi at the 17th K P Hormis Commemorative Lecture, Das further stressed that the US banks’ crisis highlights the “need for prudent asset liability management”.
Before buying bonds, banks should properly examine their risks, according to Das, who brought up the failure of Silicon Valley Bank.
According to him, India’s overall external debt is within reasonable bounds. According to Das, the RBI has been in continual contact with banks, encouraging them to implement effective risk management procedures, carry out regular stress tests, and create enough capital buffers.
The governor spent the most of his address discussing India’s G20 presidency and urged the group of the world’s 20 largest economies to make more concerted efforts to aid those nations that face substantial external debt risks as a result of the strengthening US dollar.
Additionally, he asserted that the coalition must finance the most vulnerable nations in a warlike manner. Regarding the US banking crisis, in which two mid-sized banks (Silicon Valley Bank and First Republic Bank) each had balance sheets worth over $200 billion last week, he said the crisis’ persistence highlights the need for strict regulations that prioritize sustainable growth rather than an excessive buildup on either the asset side or the liability side. Without naming the US bank, Das claimed that, on the surface, one of them had a side business with unmanageable deposits that exceeded their assets.
A global financial crisis in the United States and Europe has caused bank stock prices to plummet. Our banking industry is secure. The worst of the inflation is over. The rise in the dollar does not affect us negatively because of our managed external debt, according to Das. The governor of the RBI called for concerted G20 efforts to assist nations that face large external debt concerns as a result of the strengthening currency.
The “ongoing US banking crisis” “drives home the importance of robust regulators, sustainable growth, and clearly shows risks of private cryptocurrencies to the financial system,” he said.
