Foreword

List of Select Abbreviations

Overview

Chapter I : Macrofinancial Risks - An Assessment

Global Growth

International Financial Markets

Prolonged Accommodative Policies – Downside Risks

Domestic Growth

Systemic Liquidity Index

Fiscal Consolidation

External Sector Vulnerabilities

Gold Imports

Financial Savings

Credit Cycles in the Indian Economy

Capital Market Issuers - Composition

Corporate Sector

Systemic Risk Survey

Chapter II : Financial Institutions: Soundness and Resilience

Risks to the Banking Sector

Distress Dependencies and Inter-connectedness

Banking Stability Measures (BSMs)

Network Analysis

Soundness and Resilience

Pension System in India

Chapter III : Financial Sector Regulation and Infrastructure

Regulatory Infrastructure

Payment and Settlement Systems

Financial Stability and Development Council

Product Innovations in India

Regulatory Initiatives for Financial Inclusion and Financial Stability

Annex : Methodologies

LIST OF BOXES

1.1

Household Physical and Financial Savings in India

1.2

Greater Credit Expansion Warranted as a Countercyclical Tailwind

2.1

Restructuring of Advances

2.2

Variable Rate Deposits

3.1

Extraterritorial Implication of Regulations

3.2

Challenges in Relying on Internal Models for Calculation of Capital Charge

3.3

Banking Laws (Amendment) Bill, 2012

3.4

Strengthening Regulation of the Shadow Banking System

3.5

Challenges in Migrating to Central Clearing

LIST OF CHARTS

1.1

Macro Stability Map and Financial Markets Stability Map

1.2

GDP Growth in Advanced Economies

1.3

GDP Growth in EDEs

1.4

10 yr-Sovereign Bond Yield

1.5

Growth in Loans to the Private Sector in the Euro Area

1.6

Movement in Equity Indices of Advanced Economies

1.7

Movement in Equity Indices of EDEs

1.8

Commodity Price Indices

1.9

The Systemic Liquidity Index

1.10

Y-o-Y Growth in Indian Exports and Imports

1.11

Financing of India’s Current Account Deficit

1.12

1-Month Implied Volatilities of Various Currencies against the US dollar

1.13

Saving and Investment Rates in India

1.14

Household Savings

1.15

Movement in Prices of Household Assets

1.16

Bank Credit and House Prices

1.17

Credit Cycle and GDP Growth

1.18

Composition of the Sources of Credit to the Commercial Sector

1.19

Sector-wise Share in Resource Mobilisation

1.20

Share of Categories of Issues in Resource Mobilisation

1.21

Movement in Indian Equity Indices

1.22

DII and FII Net Inflows into Indian Equity Markets

1.23

Change in Perception over the past six months

2.1

Banking Stability Indicator and its Components

2.2

Banking Stability Map

2.3

Movements of JPoD and BSI

2.4

Movement of Toxicity Index of Select Banks

2.5

Movement of Vulnerability Index of Select Banks

2.6

Systemic Inter-linkages among Select Banks: Cascade Effect

2.7

Size of the Interbank Market

2.8

Network of the Banking System – September 2012

2.9

Network of the Financial System – June 2012

2.10

Contagion Impact of the Failure of Two Large Borrower Banks in the Inner Core of the Banking System

2.11

Loss of Capital of the Banking System due to the Failure of Top 10 Connected Banks

2.12

Loss of Capital of the Banking System due to the Failure of Five Most Connected Banks at Different Levels of LGD

2.13

Loss of Capital of the Banking System due to the Failure of Top 10 Connected Banks under Different Distress Conditions

2.14

Flowchart Representing the Propagation of a Liquidity Contagion11

2.15

Liquidity Contagion due to the Failure of a Large Lender Bank

2.16

SCBs’ Lending to Non-bank Financial Entities

2.17

SCBs’ Borrowing from Non-bank Financial Entities

2.18

Exposure of Banks to NBFCs as a percentage of Capital Funds

2.19

Exposure of Insurance Companies to SCBs as per cent of Policy Holders’ Liabilities

2.20

Borrowing of Banks from AMCs as per cent of their Total Capital

2.21

Growth Rate in Advances of Bank Groups

2.22

CRAR - Bank-groups

2.23

Growth in Risk Weighted Assets - Bank Groups

2.24

Gross NPA Ratio

2.25

Growth in Gross NPAs

2.26

Trends in Slippages

2.27

Restructured Standard Advances to Gross Total Advances

2.28

Trend in number and value of cases under CDR

2.29

Industry-wise break-up of value under CDR - June 2012

2.30

Exposure to Power Sector

2.31

Asset Quality and Provision Coverage : Impact of Restructuring

2.32

Asset Quality and Provision Coverage : Cross Country Comparision

2.33

Projection of System Level CRAR of SCBs

2.34

Projection of Bank-group wise GNPA ratio

2.35

Projection of Bank-group wise CRAR

2.36

Share of Top 20 Individual Borrowers in Total Advances

2.37

Bulk Deposits to Liabilities ratio vis-a-vis excess SLR: Size-wise Distribution – September 2012

2.38

International Liabilities of Indian Banks

2.39

Foreign Claims of Indian Banks

2.40

Notional Principal Outstanding in Derivatives Market

2.41

Share of Interbank Segment in Total Derivatives Transactions – September 2012

2.42

Contagion Loss as a percentage of Capital Funds – September 2012

2.43

MTM in Customer Segment as ratio of Capital Funds – September 2012

2.44

Impact of Application of Shocks as on March 31, 2012 and September 30, 2012

2.45

Change in Net MTM as ratio of Capital Funds of Banks – September 2012

2.46

Growth rate in EBPT, PAT, Interest Income and Interest Expenses

2.47

Growth rate (Y-o-Y) in some select items of incomes - All SCBs

2.48

Provisioning Coverage Ratio - SCBs

2.49

Impact of NPA Shocks on Capital Position: SUCBs – September 2012

2.50

Liquidity Risk: ALM Mismatch - SUCBs – September 2012

2.51

Trends in Capital to Risk Weighted Assets Ratio

2.52

Trends in Gross NPA Ratio

2.53

Trends in Return on Assets

2.54

Sources and Uses of Funds – As on June 30, 2012

2.55

Trends in Advances to Real Estate Sector

2.56

Trends in Exposure to Capital Market

2.57

Trends in Select Sources of Funds - IFCs

3.1

Operational Risk Weighted Exposures of the Banking system

3.2

Amount Involved in Outstanding Cases of Frauds

3.3

Intra Group Exposures in case of One Large Financial Conglomerate

3.4

Intra Group Exposures as a Percentage of Capital Funds of the Bank in the Group

3.5

Share of Branches and Subsidiaries of Foreign Banks to Total Assets – as on end-2008

3.6

Size of Other Financial Intermediaries

3.7

Average Annual Growth of Other Financial Intermediaries Sector Pre- and Post-Crisis

3.8

Percentage Distribution of Settlement Systems (in value)

3.9

Percentage Distribution of Settlement Systems (in volume)

3.10

Forex Market Volatility and Margin (Initial and Volatility Margins) collected by CCIL

3.11

Forex Market Volatility and Change in Initial Margins collected by CCIL

3.12

Settlement Statistic for Cash Market in BSE and NSE

3.13

Settlement Statistics for Equity Derivatives Market of NSE

3.14

Settlement Statistics for Equity Derivatives Market of BSE

3.15

Insurance Penetration in Select Countries

3.16

Insurance Density in Select Countries

3.17

Action Plan for NSFE

LIST OF TABLES

1.1

External Sector Vulnerability Indicators

1.2

Aggregated Ratios for 12 Select Companies from 8 Corporate Groups

1.3

Major Risk Groups identified in Systemic Risk Survey: October 2012

1.4

Various Risks identified in Systemic Risk Survey: October 2012

1.5

Perception on occurrence of high impact events and their impact on Indian financial system

2.1

Share in the Interbank Market

2.2

Impact of Distress Conditions on Contagion Loss

2.3

Impact on Availability of Systemic Liquidity due to the Failure of a Large Lender Bank

2.4

Stress Tests - Credit Risk: Gross Credit – September 2012

2.5

Macroeconomic Scenario Assumptions

2.6

Projection of System Level GNPA Ratios of SCBs

2.7

Projected Sectoral NPA

2.8

Banks' Exposure to their Top 20 Individual Borrowers

2.9

Liquidity Ratios

2.10

Liquidity Risk: SCBs – September 2012

2.11

Interest Rate Risk – Trading and Banking Books – September 2012

2.12

Relative Size of the Derivatives Market in India –March 2012

2.13

Performance Parameters of RRBs

2.14

Select Financial Soundness Indicators of SUCBs

3.1

Premium under Life Sector: Bancassurance Vs Other Channels

3.2

Premium under Non Life Sector: Bancassurance Vs Other Channels

3.3

Exposure of NSCCL and BSE to Banks

3.4

Financial Inclusion Initiatives

3.5

Progress under FIP for the period March 2010 to September 2012