Systemic Risk Survey

The Systemic Risk Survey (SRS) was introduced by the Reserve Bank of India in October 2011 to capture the views of market participants and other stakeholders on the aggregate risks facing the financial system. The present survey of October 2013 is the fifth in the series.

Perceptions of market experts have not changed significantly since the previous survey conducted in April 2013. Global and domestic macro-economic risks are perceived as the major risks threatening the financial system. However, the intensity of the global risks within the major risk groups remained unchanged. Market risks and Institutional risks were perceived to have medium impact in these surveys (Figure 1).

The current survey indicates that among the global risks, risk on account of global slowdown has receded slightly and sovereign risks have moved to medium risk from high risk category as perceived in the previous survey, while global funding risks have scaled up from medium to high risk category. On the domestic macro-economic front, deterioration in domestic economic outlook is considered to be most critical, up from medium risk category in previous survey to high risk. Risk from domestic inflation, corporate leverage and household savings have also increased marginally. On the other hand, risks arising from CAD, fiscal, sovereign downgrade and infrastructure were perceived to have receded in the current survey. The foreign exchange risk, asset quality deterioration and additional capital requirements of banks have also been mentioned as other risks (Figure 2). The perception about confidence in the Indian financial system has deteriorated during the past six months (Chart 1).

On likely changes about credit off-take in next three months, respondents felt that credit demand is likely to remain unchanged or may increase marginally. Regarding credit quality, majority of respondents felt that it is likely to deteriorate in the near future (Chart 2).