1: Understanding Financial Stability and Development Council (FSDC)

- FSDC, established in 2010, is a robust body aimed to enhance the stability and growth of India's financial sector, with the Finance Minister as its ex-officio chairman.

- It mainly strives for inter-regulatory coordination and fortifying financial stability.

2: Highlighting Key Insights from the 27th Financial Stability Report- June 2023

- Global Economic Challenges: The report recognized the uncertainty in the global banking sector, inflation moderation, and geopolitical tensions as significant challenges.

- Indian Economic Strengths: The resilient Indian economy, characterised by strong macroeconomic fundamentals and consistent growth, was observed in the report.

- Positive Indications: Closure of the current account deficit, augmented forex reserves, fiscal consolidation, and a vigorous financial system emerged as positive indicators.

3: Banking System Sturdiness: Impressive Stats & Facts

- Scheduled Commercial Banks (SCBs) reached new heights in Capital-to-Risk-Weighted Assets Ratio (CRAR), hitting 17.1%, and Common Equity Tier 1 (CET1) ratio at 13.9% in March 2023.

- There was notable improvement in asset quality, with SCBs reporting a 10-year low in Gross Non-Performing Assets (GNPA) ratio at 3.9%, and Net Non-Performing Assets (NNPA) ratio at 1.0% in March 2023.

4: Macro Stress Tests Revelations: Reflecting System's Robustness

- The stress tests conducted demonstrated that SCBs are anticipated to meet minimum capital necessities even under severe stress scenarios.

- The report unveiled projections for system-level CRAR for March 2024, estimated at 16.1% under baseline, 14.7% under medium, and 13.3% under severe stress scenarios, confirming robustness.

5: General Knowledge Focus: Significance of Financial Stability Reports (FSRs)

- FSRs, released by RBI, play a crucial role in reviewing India's financial system sturdiness and identifying potential risks.

- They offer an authoritative overview of the nation's economic resilience, thus informing policy measures and strategies at both national and individual banking levels.

- These reports further highlight macroeconomic factors impact on banks and the inter-linked financial system, making themselves a valuable resource in the policy-making and financial forecasting domains