##ence of the nbfc sector to credit risk shocks under a baseline and two stress scenarios – medium and high risk – 5 / 7 bis - central bankers'speeches show that under the medium risk shock of a one standard deviation ( sd ) increase in the slippage ratio, the gnpa ratio increases to 5. 5 per cent. the resulting income loss and additional provisional requirements reduce the crar by 60 basis points relative to the baseline. under the high risk shock of 2 sds, the capital adequacy ratio of the sector declines by 90 bps relative to the baseline to 23. 5 per cent. financial markets just as nbfcs complement banks as a source of finance, financial markets are another important source of resource mobilisation. led by banking and financial sector stocks, india's equity markets are outperforming the msci emerging market index. india's share in the msci has increased from 6. 5 per cent in 2012 to 14. 9 per cent by august 2023, reflecting the brightening economic outlook, and raising expectations of attracting higher passive investments. india's 12 - months forward price to earnings ( pe ) ratio is the highest in the world, reflecting the premium on india's growth story. equity market volatility ( vix ) in india has remained largely stable and lower in comparison to peers. india is the largest recipient of foreign portfolio investments ( fpi ) inflows among the comparable emes during april - july 2023. in the bond markets, the yield curve is flattening but has not inverted as in other countries, reflecting anchored expectations on india's growth prospects as well as a certain degree of insulation from global spillovers. the indian rupee is among the most stable currencies in the world - during 2023 ( up to september 11 ), the 1 - month implied volatility of the inr decreased to 4. 08 per cent from 5. 22 per cent during the same period in 2022. inr volatility, measured by the coefficient of variation, has remained the lowest among major aes and emes. exchange rate stability is regarded as an important element of financial stability. conclusion in conclusion, the approach to the financial sector in india is reflecting a new paradigm in which macroeconomic and financial stability are seen as strongly complementary and providing the foundation for medium - term growth prospects. prudence is taking precedence over exuberance, and this is reflected in the steady

change leveraged on technology. the trinity of jam – jan dhan ( basic no - frills accounts ) ; aadhaar ( universal unique identification ) ; and mobile connections – is bringing the hitherto excluded into the ambit of formal finance and is enabling the targeting of direct benefit transfers from the government to the beneficiaries. currently, there are a record 500 million jan dhan beneficiaries, out of which more than half are women. mobile internet subscription has increased sharply, opening up avenues for innovative e - business models to augment access to financial services in the hinterland through efficient disbursal of e - government services. it is also boosting entrepreneurship by stimulating tech start - ups. india's unified payment interface ( upi ), an open - ended system that powers multiple bank accounts into a single mobile application of any participating bank, is propelling interbank peer - to - peer and person - to - merchant transactions seamlessly. this payment revolution is attracting wide international interest. in august 2023, the upi crossed the milestone of recording more than 10 billion transactions a month. in addition, both large value and small value payment systems3 in india operate on a 24 by 7 by 365 basis. non - banking financial companies – connecting the last mile another important segment of india's financial system, the non - banking financial companies ( nbfcs ) have emerged as important intermediaries in india's financial landscape because they connect the last mile and also provide an alternative to banks. unlike in other jurisdictions, nbfcs are regulated by the rbi in a scale - based framework with bank - like regulatory interventions. their widening presence is reflected in a rising credit to gdp ratio - from 8. 6 per cent to 12. 3 per cent between 2012 - 13 and 2021 - 22. the sector has gone through periods of liquidity stress such as evaporation of market confidence in 2018 - 19 and again during the pandemic, but it has emerged stronger and sounder. credit growth is in double digits and is supported by strong capital buffers and healthy balance sheets. nbfcs rely heavily on borrowings to fund their activities, with banks constituting around 41 per cent of their borrowings at end - march 2023. importantly, around ninety per cent of bank lending is to nbfcs that are a - rated and above. therefore, contagion risk is limited. system level stress tests for assessing the resili