Though the economy has steadily gained momentum and remained resilient since the second quarter of the current fiscal, the Omicron variant of coronavirus remains the major challenge along with rising inflation pressures, says the Reserve Bank in its second financial stability report.
In the foreword to the report released on Wednesday, RBI Governor Shaktikanta Das notes that after the destructive second wave in April-May 2021, the growth outlook has progressively improved, though there are headwinds from global developments and more recently from the Omicron virus.
Admitting that inflation remains a concern as it is by the build-up of cost-push pressures, Das has called for stronger supply-side measures to contain food and energy prices.
Noting that the financial institutions have remained resilient amidst the pandemic and stability prevails in the financial markets cushioned by policy and regulatory support, the governor is confident that the strong balance sheets of banks with higher capital and liquidity buffers will help mitigate future shocks.
On the domestic front ,progress in vaccination has enabled the recovery to regain traction after the debiliating second wave of the pandemic ,notwithstanding signs of slowing pace more recently ;the cooperate sector is gaining strength and bank credit growth is improving.
The financial stability report(FSR) is published bi-annually and includes contributions from all the fiinancial sector regulators .Accordingly, , it reflects the collective assessment of the sub committee of the financial stability and development council (FSDC-SC) on risks to financial stability .
