The banking crisis, both globally and internally in India, has often posed the question of vigilance in the all-important banking sector, which is essentially the backbone of the larger world economy. The RBI governor Shaktikanta Das in a recent speech, underscored the importance of the said vigilance in the sector.
In the recent past, Das warned of the over-reliance of the financial paradigm on NBFCs and the increase in credit.
While speaking at the Global Conference on Financial Resilience, IGIDR Campus, Mumbai, Das invoked the previous instances of major banking failures around the globe.
He laid particular emphasis on being able to sense the build-up of crises. And how supervisors should be able to detect the build-up of a crisis by deploying mechanisms that could elude any crisis. | File/ Representative
Need For Better Supervsion
He touched upon the crisis that ensued in the United States when the likes of First Republic and Silicon Valley Bank went belly up in 2023. Das also mentioned the debacle of the Swiss giant Credit Suisse, which was absorbed by another major Swiss bank, UBS.
According to Das, the US Fed, which acted on it, developed a report on it, which could shed some light on what can be done. Das invoked the concern of 'supervisors' falling behind the cycle, globally. The central bank governor underscored the importance of better supervision.
He laid particular emphasis on being able to sense the build-up of crises. And how supervisors should be able to detect the build-up of a crisis by deploying mechanisms that could elude any crisis.
Yes Bank shares listed at the NSE, today have a value of Rs 24.03, down from their peak of over Rs 300 per share in August 2018. |
Yes Bank Rescue
In the recent past, India also found itself on tricky wickets; the most recent and prominent example would be the case of Yes Bank, which drowned and was rescued by a combined effort of the Central Bank and the country's largest bank, SBI, which aided the practice of the bank's stabilisation and recovery.
Even in the equity markets, after a cataclysmic, Yes Bank shares listed at the NSE, today have a value of Rs 24.03, down from their peak of over Rs 300 per share in August 2018. However, over the past year alone, bank shares have risen 47.88 per cent or Rs 7.78, indicating a path to recovery.
