Active Stocks
Tue Dec 05 2023 15:57:23
  1. Power Grid Corporation Of India share price
  2. 222.4 4.46%
  1. Tata Steel share price
  2. 131.6 0.5%
  1. NTPC share price
  2. 285.5 3.89%
  1. State Bank Of India share price
  2. 608.4 2.31%
  1. ICICI Bank share price
  2. 1,013.15 2.28%
Business News/ News / India/  No signs of systemic risk rising: RBI’s Patra
Back Back

No signs of systemic risk rising: RBI’s Patra

India on track to become $5tn economy by 2027, no signs of systemic stress in credit growth, says RBI deputy governor.

Michael Patra.Premium
Michael Patra.

Mumbai: India is on track to become a $5 trillion economy by 2027 and the third-largest by market exchange rates, and there are no signs of systemic stress building up at the current pace of credit growth, said Reserve Bank of India’s deputy governor Michael Patra while addressing a seminar hosted by National Bank of Cambodia on 18 September. The speech was uploaded on RBI’s website on Thursday.

“Our assessment, based on a menu of approaches, indicates that the current rates of credit expansion are not pointing to systemic stress building up. In the Indian context, warning lights flash at growth rates of 16-18%," he said.

According to the RBI’s latest data, banking system credit grew 19.8% from a year ago in the fortnight ended 25 August. Net interest margins are averaging around 3.8%, below the 5% threshold, Patra said.

Beyond that, it could have had implications for financial stability.The current episode of bank credit expansion is led by retail loans and since these are being distributed across a wider borrower base, they mitigate the accumulation of systemic risk, he added. “We are, however, watchful as herding by banks in retail loans space may lead to potential cascades across the system if defaults do occur," he said.

Patra said if a shock in the form of a 250 basis points parallel upward shift in yield curve is applied, the mark-to-market impact on the held to maturity portfolio will reduce system level capital ratio from 17.1% in March to 13.7%, which is still above the regulatory requirements.

Milestone Alert!
Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Gopika Gopakumar
Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
Catch all the Elections News, Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Updated: 22 Sep 2023, 12:41 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App