The Systemic Risk Survey (SRS) was initiated by the Reserve Bank in October 2011 to capture the views of market participants and other stakeholders on the aggregate risks facing the financial system. The present Survey was conducted in April 2013.

As the factors driving the on-going turmoil in global financial markets have been changing, the perception of market participants has also changed from the first round of SRS conducted in October 2011 to the latest round conducted in April 2013. Deterioration in asset quality and market volatility were perceived to be important factors affecting the financial system during the first SRS. As per the latest survey, market participants perceive global and macro-economic risks to be the most important factors affecting the financial system. Majority of respondents feel that there is medium chance of a high impact event occurring in the global financial system, whereas, in the first SRS, the chance of occurrence of high impact event in the global financial system was high. The participants, however, continued to have fair confidence in the stability of the Indian financial system (Table 1).

Among the global risks, declining global growth, sovereign risk/contagion and global inflation are polled as prominent factors. Deterioration of the domestic outlook, domestic inflation, elevated current account deficit, high fiscal deficit and lack / slow pace of infrastructure development are major macroeconomic risks identified by participants. The foreign exchange risk, funding risk, asset quality deterioration and low credit off-take have also been mentioned as risks facing the Indian financial system (Table 2).

Survey respondents felt that there was a medium chance of a high impact event occurring in the Indian financial system in the next half-year period. The stakeholders had medium level of confidence in the stability of the global financial system as a whole. There is a perception that if instability in the global financial system escalates in the next six months, the stability of the Indian economy would be impacted strongly. However, the survey also indicates that the participants are fairly confident of the stability of the Indian financial system (Table 3). Further, the perception has remained mostly unchanged during the past half-year (Chart 1).