New Delhi. RBI Deputy Governor M Rajeshwar Rao has said that the Indian financial system appears stronger than before. He said that despite the challenges prevailing at the global level, the Indian economy has a distinct identity. He was speaking at the JP Morgan India Leadership Series.

The financial system is facing challenges 

In his speech, he said that the global financial system is facing strong challenges from various sectors, including high levels of public debt, elevated asset valuations, economic and financial fragmentation, geopolitical tensions, and risks posed by rising cyber threats. Amid these global challenges, the Indian economy shows strong macroeconomic fundamentals. Economic activity is growing steadily, supported by a financial system that appears stronger than ever before.

These reforms took place in the Indian banking sector 

He further said that the Indian banking sector has improved significantly, particularly in key parameters such as capital adequacy, asset quality and profitability. There has been a steady increase in credit expansion. Despite the strong performance of the financial system and healthy financial performance, as a regulator and supervisor we need to remain vigilant about the risks.

On climate risk, he said climate events also adversely impact the credit quality and debt-repayment capabilities of borrowers. They can erode assets created from institutional finance, impacting the health of financial institutions.