, notwithstanding the severity and multiplicity of the adverse shocks, india's financial markets have shown admirable resilience. this is in large part because india's banking system remains sound, healthy, well capitalized and prudently regulated. second, our comfortable reserve position provides confidence to overseas investors. third, since a large majority of indians do not participate in equity and asset markets, the negative impact of the wealth loss effect that is plaguing the advanced economies should be quite muted. consequently, consumption demand should hold up well. fourth, because of india's mandated priority sector lending, institutional credit for agriculture has remained unaffected. the farm loan waiver package implemented by the government should further insulate the agriculture sector from the crisis. finally, over the years, india has built an extensive network of social safety - net programmes, including the flagship rural employment guarantee programme. these uniquely indian versions of automatic stabilizers should protect the poor from the extreme impact of the global crisis. rbi's policy stance going forward, the reserve bank's policy stance will continue to be to maintain comfortable rupee and forex liquidity positions. there are indications that pressures on mutual funds have eased and that nbfcs too are making the necessary adjustments to balance their assets and liabilities. despite the contraction in export demand, we will be able to manage our balance of payments. it is the reserve bank's expectation that commercial banks will take the signal from the policy rates reduction to adjust their deposit and lending rates in order to keep credit flowing to productive sectors. in particular, the special refinance windows opened by the reserve bank for the msme ( micro, small and medium enterprises ) sector, housing sector and export sector should see credit flowing to these sectors. also the spv set up for extending assistance to nbfcs should ease the financing constraints of nbfcs. the government's fiscal stimulus should be able to supplement these efforts from both supply and demand sides. when the turn around comes over the last five years, india clocked an unprecedented nine per cent growth, driven largely by domestic consumption and investment even as the share of net exports has been rising. this was no accident or happenstance. true, the benign global environment, easy liquidity and low interest rates helped, but at the heart of india's growth were a growing entrepreneurial spirit, rise in productivity and increasing savings. these fundamental strengths continue to be in place. nevertheless, the global crisis will dent

prepared by the banks themselves, using the socalled bottom - up approach and applying the methodology of the european banking authority. the test was subject to strict quality assurance by the ecb and the national supervisory authorities. the exercise assesses the foreseeable position of banks in two scenarios : one, a baseline or more likely scenario ( a macroeconomic scenario approved by the european commission ) ; the second, an adverse – and severe but not impossible – bis central bankers ’ speeches scenario ( set by the european systemic risk board ), in the period 2014 – 2016. the consolidated balance sheets at year - end 2013 were taken as the starting point for the exercise. 3. scope of the exercise the comprehensive assessment examined 130 banks from 19 countries. the main data from the exercise as follows : – the assets reviewed account for 81. 6 % of the total assets of banks supervised by the single supervisory mechanism. the remaining assets, somewhat more than 18. 4 %, are assets of banks supervised indirectly by the single supervisory mechanism. – 15 spanish banks were examined, accounting for 90 % of the assets of spanish deposit - taking institutions. – along with teams from all the supervisory authorities, including naturally the banco de espana, consultancies, appraisers, audit firms and, evidently, the banks themselves under examination all participated. – more than 6, 000 experts, 600 of whom in spain, were involved at the european level. – for spain, the cost of the exercise was €32 million in total, of which €11 million correspond to the consultancy, oliver wyman, and €21 million to the audit firms and consultancies. under the terms envisaged in the current law on the management, supervision and solvency of credit institutions, this cost will be borne by the banks, in accordance with the legally established keys and procedures. as to the total cost of the exercise for the ecb and the supervisory authorities as a whole, i am not yet in a position to provide it. but the cost is high. 4. assessment of the exercise from an overall standpoint first, i do believe that having conducted such an exercise in such a short period of time is an achievement in itself. never to date has a stress test and an asset quality review been combined at the european level. it is a challenge of the first order, since banks from 19 countries with different supervisory models and different regulatory frameworks were involved. however, thanks to a sound methodology and with rigorous quality assurance processes