to the onsite supervisory teams. the thrust of the reserve bank ’ s supervision is now more on root causes of vulnerabilities rather than dealing with symptoms. bank - wise as well as system - wide supervisory stress testing adds a forward - looking dimension for identification of vulnerable areas. a risk - based supervision framework focussing on know your customer ( kyc ) / anti money laundering ( aml ) risk has been created in line with global practices. fintech initiatives are being embraced in the form of innovative technologies for regulation ( regtech ) and supervision ( suptech ). 19. as regards regulatory intervention in banks to protect the interest of depositors, our approach in recent times has been to first work closely with the management to find a workable solution. when this does not work, we have intervened and put in place a new arrangement within a quick time schedule. with preservation of financial stability and depositors ’ interest being uppermost in our agenda, we could swiftly resolve the situation at two scheduled commercial banks. notwithstanding improvements being made, it is recognised that enhancing and refining the supervisory framework is a continuous process. the rbi remains strongly committed to preserve the stability of the financial sector. we will do whatever is necessary on this front. recapitalisation of banks 20. going ahead, financial institutions in india have to walk a tightrope in nurturing the economic recovery within the overarching objective of preserving long - term stability of the financial system. the current covid19 pandemic related shock will place greater pressure on the balance sheets of banks in terms of non - performing assets, leading to erosion of capital. building buffers and raising capital by banks – both in the public and private sector – will be crucial not only to ensure credit flow but also to build resilience in the financial system. we have advised all banks, large non - deposit taking nbfcs and all deposit - taking nbfcs to assess the impact of covid - 19 on their balance sheet, asset quality, liquidity, profitability and capital adequacy, and work out possible mitigation measures including capital planning, capital raising, and contingency liquidity planning, among others. 21. preliminary estimates suggest that potential recapitalisation requirements for meeting regulatory norms as well as for supporting growth capital may be to the extent of 150 bps of common equity tier - i capital ratio for the banking system 2. prudently, a few large public sector banks

). increasing access to finance in this sector is among the eu priorities. it is also true that this portfolio accounted for the highest post - crisis npl ratio in the european union. at its peak, the average npl ratio for small and medium enterprises reached around 20 percent at european union level. in romania, the ratio was 35 percent, while the npl ratio for microenterprises accounted for 53 percent. therefore, the same lesson learnt from the household sector also applies here : the small and medium enterpises ’ financial inclusion should unfold in a sustainable way. on the other hand, the experience with macroprudential instruments for companies is extremely limited at the european level. for example, france has recently implemented a measure focusing on highly indebted firms, but it applies only to large companies. therefore, i think that deepening this area of research is very useful for macroprudential policymakers. in romania we have also tried to come up with solutions that might improve small and medium enterprises ’ financial inclusion. our macroprudential authority – the national committee for macroprudential oversight, comprising representatives from the central bank, the ministry of public finance, and the financial supervisory authority – adopted last year a recommendation to the government, seeking to improve financial discipline in the economy and the financial soundness of firms. i strongly believe that addressing these structural vulnerabilities in the corporate sector will significantly increase the number of bankable firms and enhance the financial inclusion of small and medium enterprises. last, but not least, the climate - related topics have become more and more prominent worldwide. the financial system should not ignore the effects of climate risks. central banks and supervisory authorities have joined the scene. there is a significant interest at eu level in the role of sustainable finance, a high - level expert group on sustainable finance being established by the union. the network for greening the financial system, that brings together 34 members, out of which 8 are central banks and supervisory authorities, highlighted the role of climate risks as a source of financial vulnerabilities. not only the increased frequency and severity of extreme weather can translate into economic and financial losses for the real economy and the financial system, but consequences can also arise from transitioning to a low - carbon economy. governments ’ climate policy, new technologies and consumer preferences will be the main drivers influencing the developments in carbon - intensive sectors. having in mind the important ramifications, a coherent policy mix is needed in order to