RBI chief warns banks on asset-liability mismatch amid SVB crisis

Mumbai:

Reserve Bank of India Governor Shaktikanta Das has warned banks against asset-liability irregularities, saying both are harmful to financial stability and hinted that it appears that the US banking system is continuing to The crisis is born out of such similarities.

Delivering the annual KP Hormis (Founder of Federal Bank) commemoration lecture in Kochi this evening, the Governor was quick to acknowledge and assure that the country’s financial sector is stable and the worst of inflation is behind us.

Amid continued exchange rate volatility, particularly due to the overvalued US dollar, and its impact on countries’ ability to service external debt, Mr. Das said, “We have nothing to fear. Not because our external debt is manageable and thus increases in value. The greenback is not a problem for us.”

The RBI governor focused most of his speech on India’s G20 presidency and in this context, he called for more concerted efforts by the group of 20 major economies of the world to reduce external debt due to the rise in the US dollar. Countries facing high risks can be helped.

He said the group should provide climate change financing to the most affected countries on a war footing.

On the U.S. banking crisis, where two mid-sized banks (Silicon Valley Bank and First Republic Bank) with balance sheets of more than $200 billion each collapsed last week, he said the ongoing crisis underscores the importance of these strong regulations. gives rise to those that focus on sustainable development. and not overbuilding either on the asset side or on the liability side.

Before him, one of them had more unregulated deposits than its side business, Mr. Das said, without naming the US bank.

Mr. Das, who has been an outspoken critic of private digital currencies, said the ongoing US banking crisis also clearly shows that private cryptocurrencies pose risks to the financial system.