Sunday, March 26, 2023

RBI Governor Das cautions banks against any build-up of asset-liability mismatch – Usky News

Mumbai: Governor of the Reserve Bank Shaktikanta Das on Friday cautioned banks against any build-up of asset-liability mismatches, saying both are detrimental to financial stability and indicated that the ongoing crisis in the US banking system emanated from such mismatches.
Annual KP Hormis (Federal Bank Founder) Memorial Lecture This evening at Kochi, the Governor acknowledged and assured that the domestic financial sector is stable and the worst of inflation is behind us.
Amid continued volatility in exchange rates, especially due to excessive appreciation of the US dollar, and its impact on the external debt repayment capacity of nations, Das said, “We have nothing to fear as our external debt is manageable. And thus the greenback does not pose a problem to us”.
The Governor focused much of the speech on India’s G20 Presidency and in this context, he called for more coordinated efforts by the grouping of the world’s 20 largest economies to help countries with high external debt exposure due to the rise in the US dollar.
He also said that the group should provide climate change financing to the most affected countries on a war footing.
on the US banking crisis where two medium-sized banks (Silicon Valley Bank And First Republic Bank) with a balance sheet of more than US$200 billion petered out last week, he said, adding that the ongoing crisis has driven home the importance of strong regulations that focus on sustainable growth and not excessive leverage on the asset side or the liability side. do not build.
Without naming the American bank, Das said prima facie one of them had deposits disproportionate to its assets and business which was difficult to handle.
Das, who has been an outspoken critic of private digital currencies, said that the ongoing US banking crisis also clearly shows the risks private cryptocurrencies pose to the financial system.


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