for banks to review their policies in this regard ( funding sources ) and make sustained efforts towards mobilising stable retail deposits by providing wider access to better quality of banking services. this would sustain prudent business expansion without facing undue asset - liability mismatches. ” in april 2007 it was again reiterated that “ while buoyant deposit growth has, to an extent, alleviated the financial constraints on banks, incremental non - food credit deposit ratios remain high … these developments are likely to pose challenges to banks in managing liquidity. ” the rbi guidelines on securitization of standard assets had laid down detailed policy on provision of liquidity support to special purpose vehicles ( spvs ). while the policy enabled a liquidity facility, by the originator or a third party, to help smoothen the timing differences faced by the spv between the receipt of cash flows from the underlying assets and the payments to be made to investors, it was subject to certain conditions to ensure that the liquidity support was only temporary and got invoked to meet cash flow mismatches. any commitment to provide such liquidity facility, is to be treated as an off - balance sheet item and attracts 100 % credit conversion factor as well as 100 % risk weight. the facility was specifically proscribed for the purposes of a ) providing credit enhancement ; b ) covering losses of the spv ; c ) serving as a permanent revolving funding ; and d ) covering any losses incurred in the underlying pool of exposures prior to a draw down. concluding remarks let me hasten to reiterate that india cannot be immune to global developments but we, in the rbi, are actively monitoring the global developments, articulating our assessments as well as responses in regard to impact on india and are in a state of readiness to act, as appropriate, in a timely manner. the rbi appreciates the understanding shown and cooperation extended by the banking community. in particular, i appreciate collaboration between rbi and indian banks ’ association. thank you and wish the conference all success.

the establishment of the fsu, the reserve bank started publication of half yearly financial stability reports ( fsrs ) – which now forms a critical tool for the reserve bank in its attempt to communicate the potential systemic risks facing the financial system to all stakeholders of the system. somewhat unique, in the indian context, is the fact that our fsrs are discussed and deliberated upon in the meetings of the sub committee of the fsdc which enables the views of all the sectoral regulators and the government on risks to systemic stability to be incorporated in the fsr. the fsr, thus presents, a holistic assessment of the risks to the stability of the indian financial system. a number of initiatives have been taken to improve the financial stability analytics to take full account of the different sources of systemic risk. a series of indicators and indices have been developed to assess the health and resilience of the financial system on an ongoing basis. let me discuss some of these very briefly as i am aware that there is a detailed presentation which will be made on these initiatives during the course of this seminar. stability indicators and maps stability indicators and maps represent coincident indicators of systemic stress in the financial system. they are constructed by aggregating information from different segments of the overall financial system and encapsulating the information in a single statistic which measures the current state of instability in the financial system. the financial stability map and indicator in india depict the overall stability condition in the indian financial system. the financial stability indicator is based on the three major segmental indicators namely, the macro stability indicator, the financial markets stability indicator and the banking stability indicator. each of these indicators is in turn based on contemporaneous developments in a number of risk factors relevant to the respective segments. the financial stability indicator is derived using a simple average of macro, financial markets and banking stability indicators. bis central bankers ’ speeches recognising the importance of fiscal health for financial stability, separate fiscal vulnerability and fiscal stress indices have been developed to respectively assess inter - temporal changes in the vulnerabilities arising from the fiscal conditions and to indicate the likelihood of crisis like events. a systemic liquidity indicator attempts to gauge the degree of stress in domestic liquidity conditions and to establish time frames for potential extreme events. banking stability measures and expected shortfall banking stability measures, a cross - sectional econometric framework, capture the distress dependence among financial firms in a system using stock price data and thereby estimate the extent to which