{"id":7528,"date":"2019-11-28T09:00:53","date_gmt":"2019-11-28T03:30:53","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=7528"},"modified":"2020-12-07T14:58:37","modified_gmt":"2020-12-07T09:28:37","slug":"rbi-speaks-on-emerging-challenges-to-financial-stability","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/rbi-speaks-on-emerging-challenges-to-financial-stability\/","title":{"rendered":"RBI Speaks on Emerging Challenges to Financial Stability"},"content":{"rendered":"\n<p class=\"has-drop-cap\">RBI Governor Mr Shaktikanta Das, after taking over his office has given 8 speeches concerning the financial and monetary conditions of India. <strong>Recently, on 19th August 2019<\/strong> at the conference, he talks about the subject &#8220;Financial Stability&#8221; affirming his concerns relating to emerging challenges to financial stability.&nbsp;<\/p>\n\n\n\n<p><em>Before understanding the results of the speech, let us know in brief about how the central banks operate.&nbsp;<\/em><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a4a6bc324a\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a4a6bc324a\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-speaks-on-emerging-challenges-to-financial-stability\/#History_of_Central_Bank_all_over_the_World\" title=\"History\nof Central Bank all over the World\">History\nof Central Bank all over the World<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-speaks-on-emerging-challenges-to-financial-stability\/#Financial_Stability_as_per_Indian_Economy\" title=\"Financial\nStability as per Indian Economy\">Financial\nStability as per Indian Economy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-speaks-on-emerging-challenges-to-financial-stability\/#Highlights_from_the_speech_of_RBI_Governor\" title=\"Highlights\nfrom the speech of RBI Governor&nbsp;\">Highlights\nfrom the speech of RBI Governor&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-speaks-on-emerging-challenges-to-financial-stability\/#Wrapping_up_the_Article\" title=\"Wrapping\nup the Article\">Wrapping\nup the Article<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"History_of_Central_Bank_all_over_the_World\"><\/span><strong>History\nof Central Bank all over the World<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Ever\nsince Central banks keep shifting its attention from one stability to another.\nCentral banks have been initiated to stabilize the scenarios prevailing at that\ntime, such as central banks in England and France were undertaken to stabilize\nwar conditions, in Sweden to stabilize the issues relating to currency.<\/p>\n\n\n\n<p>US\nFederal Reserve was initiated in the 20th century for financial stability\nbecause the country suffered panic in the year 1907. In this period, inflation\nwas never a problem as commodities and gold-backed currencies. In the era of\nWorld War I, mismanagement in money leads to hyperinflation in Germany that\nbough the attention of Central banks primarily to focus on Price Stability.<\/p>\n\n\n\n<p>However,\nafter the world war was over central bank becomes the prime issuer of\ncurrencies and operated with the main objective of price stability and\nfinancial stability. During the period in late 2008 when the world&#8217;s financial\nsector faced the highest instability even though price remained stable for\nyears creates the environment due to which the faith of the public in the\nfinancial market seems to get disappeared.<\/p>\n\n\n\n<p>Ten\nyears after the crisis, though price remains stable now financial markets again\ndemand concern due to ongoing trade conflicts between the US and China\naffecting the Global Economy. However in this era, Central Banks assured the\ncondition is much better off than compared to the situation back then in 2008,\nwhich was hard to believe by the market participants as the same was assured in\n2008.<\/p>\n\n\n\n<div class=\"read\"><p><b>Read, Also:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-supervision-to-cover-auditors-rbi-measures-to-strengthen-financial-sector\/\">NBFC Supervision to Cover Auditors- RBI measures to strengthen Financial Sector<\/a><\/mark>.<\/p><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Financial_Stability_as_per_Indian_Economy\"><\/span><strong>Financial\nStability as per Indian Economy<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>During\nthe 2008 crisis, the trajectory in the Indian Economy was much different from\nthe rest of the world. Indian Economy suffered price instability in the span of\nthe period 2008-2013 with inflation range between 8 to 10 percent. Due to the\ncontinuation of price instability, the Indian Economy began to adopt an\ninflation target regime that enables to bring inflation down to 3% to 5%.&nbsp;<\/p>\n\n\n\n<p>At present, problems shifted to the NBFC sector where fraud and mismanagement have created a solvency crisis which is creating troubles for those mutual funds who had invested in NBFCs. <strong>Credit Rating agencies<\/strong> are also blamed for the same as they lack the proper system in place for assigning adequate credit ratings to financial players.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Highlights_from_the_speech_of_RBI_Governor\"><\/span><strong>Highlights\nfrom the speech of RBI Governor&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Mr Das\nstated in his speech that in spite of years have passed after the crisis, still\nthe financial reform remains uneven. The current state of the banking sector is\nalso uncertain. With digital innovation, banks faced competition from\nnon-traditional players such as Fintech and Bigtech. The developments of these\nplayers lead to financial stability in an emerging economy like India.\nRegulatory authorities play an essential role in providing a framework that\nenables the operations of banks and non-traditional players.<\/p>\n\n\n\n<p>Financial\nIntermediaries such as Banks play a dominant role in the credit market. Banking\nSectors are monitored continuously to ensure the health of the banking sector\nremains stable. He added in his speech by stating about the new norms initiated\nwith effect from June 2019 concerning stressed asset, which has been declined\nwith the introduction of related norms. He also disclosed the initiative of RBI\nthat is in the process to build supervisory and regulatory cadres for governing\nand supervising operations of banks and non-banking institutes. The governor of\nRBI also highlighted the importance of risk management system, compliance\nfunctions, and internal control mechanisms should be in place to strengthen the\nbank and its functioning.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Wrapping_up_the_Article\"><\/span><strong>Wrapping\nup the Article<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Increased currency and debt crises occurring globally have called for the careful regulations and supervisory authority to monitor financial markets. New entrants in Financial Sectors such as fin-tech, big-Tech, NBFCs are completely modifying the phase of how the financial sector operates.&nbsp;<\/p>\n\n\n\n<p>These\nnew players have added the potential of growth in financial services by the\nprovisions of payment, remittances, and cross- border payments. These players\nhave the potential to grow and become a large financial institution that raises\nconcerns over financial stability in India.<\/p>\n\n\n\n<div class=\"shadow4\">Mr.\nDas, in his speech reflected his concern relating to the new challenges that\nare emerging that continuously deals with RBI by regulating frameworks to adapt\nitself with the evolving and dynamic scenario.<\/div>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/insights-of-credit-score-and-importance-to-maintain-it\/\">Insights of Credit Score and importance to maintain it<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>RBI Governor Mr Shaktikanta Das, after taking over his office has given 8 speeches concerning the financial and monetary conditions of India. Recently, on 19th August 2019 at the conference, he talks about the subject &#8220;Financial Stability&#8221; affirming his concerns relating to emerging challenges to financial stability.&nbsp; Before understanding the results of the speech, let [&hellip;]<\/p>\n","protected":false},"author":11,"featured_media":7530,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[544],"tags":[1043],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/7528"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=7528"}],"version-history":[{"count":19,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/7528\/revisions"}],"predecessor-version":[{"id":17592,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/7528\/revisions\/17592"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/7530"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=7528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=7528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=7528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}