Financial system remains stable despite weakening domestic growth, says RBI

The country’s GDP slowed to a six-year low of 4.5% in the second quarter of FY20, forcing the RBI to slash its growth forecast.

A security guard’s reflection is seen next to the logo of RBI logo at the RBI headquarters in Mumbai. File

The Reserve Bank on Friday said the country’s financial system remains despite slowing economic growth.

The country’s GDP slowed to a six-year low of 4.5% in the second quarter of FY20, forcing the RBI to slash its growth forecast by 240 basis points to 5% for the fiscal in its December monetary policy review.

“India’s financial system remains stable notwithstanding weakening domestic growth,” the central bank said in the Financial Stability Report.

The report said all major risk groups such as “global risks, risk perceptions on macroeconomic conditions, financial market risks and institutional positions” were perceived as medium risks affecting the financial system.

However, the perception of risks on various fronts like domestic growth, fiscal, corporate sector and banks’ asset quality increased between April and October 2019, it said.