Mumbai: The Reserve Bank of India (RBI) in the its 21st issue of the Financial Stability Report (FSR) released Friday, lauded the government intervention during the coronavirus pandemic which, it said, ensured smooth functioning of financial markets.
The central bank, however, warned that an overleveraged non-financial sector, simmering global geopolitical tensions, and economic losses on account of the pandemic pose major downside risks to global economic prospects.
The FSR report reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability, and the resilience of the financial system in the context of contemporaneous issues relating to development and regulation of the financial sector.
Government action during pandemic: In response to COVID-19, a combination of fiscal, monetary and regulatory interventions on an unprecedented scale has ensured normal functioning of financial markets. Actions undertaken by financial sector regulators and the Government to mitigate the impact of COVID-19 eased operational constraints and helped in maintaining market integrity and resilience in the face of severe risk aversion, the report said.
