Page 385 - Contributed Paper Session (CPS) - Volume 4

CPS2444 Avijit Joarder et al.

How Resilient is Indian banking system? –
IBS Perspective
1
Avijit Joarder, Ashis Nayak, Swapan-Kumar Pradhan
Reserved Bank of India
Monetary and Economic Department, BIS, Basel, Switzerland

2
Abstract
The paper focuses on specific aspect on resilience of the Indian banking
system based on the insight of International Banking Statistics (IBS). We
analyse long-term developments in overall business by the banking system,
international business with banks’ counterparties in India and foreign
countries, and capital inflow to as well as capital outflow from Indian non-bank
sector vis-a-vis banks abroad in various countries. We extensively use several
financial statistics compiled by the Reserve Bank of India (RBI) and the Bank
for International Settlements (BIS) to construct a number of indicators that
capture changes in business trends. Finally, we use the indicators based only
on IBS data to compare Indian context with selected Asian countries to
establish that our proposed indicators could be utilised to monitor
developments in Indian or similar banking system and identify potential
vulnerabilities that could lead to stress or crisis.

Keywords
Bank Lending, Cross-border capital flows, Banking Crisis, Foreign Exchange
Reserves

1. Introduction
In the aftermath of the Indian Balance of Payment (BoP) crisis during early
1990s, Indian economy began to liberalise with maximum impact of
deregulatory policies was felt in its banking sector. In 1991, the Narasimham
Committee appointed by the Government of India (GoI) suggested remedial
measures relating to the structure, organization, functions and procedures of

1 Avijit Joarder (ajoarder@rbi.org.in), Assistant Adviser, DICGC, RBI, Mumbai, India; Ashis
Nayak (anayak@rbi.org.in), Research Officer, Department of Statistics and Information
Management, RBI, Mumbai, India; Swapan-Kumar Pradhan (Swapan-Kumar.Pradhan@bis.org),
Senior Statistical Analyst, Monetary and Economic Department, BIS, Basel, Switzerland
The views expressed are those of the authors and do not necessarily those of the RBI or the
2
BIS. The authors like to thank Stefan Avdjiev (BIS), Abhiman Das (Professor, IIM, Ahmedabad,
India), Maximilian Jager (University of Mannheim), O. P. Mall & Anujit Mitra (Advisers, RBI),
Madhusudan Mohanthy (BIS), Simone Saupe (Swiss National Bank) and Philip Wooldridge
(BIS), for their helpful comments and suggestions on the detailed version of this paper.
374 | I S I W S C 2 0 1 9