RBI guv Das warns banks against asset-liability mismatches

MUMBAI: The Governor of the Reserve Bank Shaktikanta Das warned banks on Friday against any accumulation of asset-liability mismatches, saying both would undermine financial stability and that the ongoing crisis in the US banking system appears to have stemmed from such mismatches.
Annual KP Hormis (Federal Bank founder) at a memorial lecture in Kochi this evening, the Governor was quick to acknowledge and assure that the domestic financial sector is stable and the worst of inflation is behind us.
Amid constant volatility in exchange rates, especially due to the excessive appreciation of the US dollar and its impact on the ability of countries to service external debt, Das said, “We have nothing to fear as our external debt is manageable and thus the rate rises. green currency will not cause us any problems.”
The governor devoted most of his speech to India’s G20 presidency and in this context he called for concerted action by the world’s 20 largest economies to help countries facing high external debt risks due to the rising US dollar.
He also said the group should provide climate change funding to most war-torn countries.
About the US baking crisis, in which two medium-sized banks (Silicon Valley Bank and First Republic Bank) each increased their balance sheet by more than $200 billion last week, he said, adding that the ongoing crisis underscores the importance of strong rules aimed at sustainable growth rather than excessive accumulation on the asset and liability side.
Without naming the American bank, Das said one of them had non-performing deposits that exceeded their asset-side business.
Das, who has been an outspoken critic of private digital currencies, said the ongoing banking crisis in the US also clearly shows the risks private cryptocurrencies pose to the financial system.

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