Cutting the hyperbole out, what it means is that the regulators and other authorities need to be constantly vigilant and proactively take whatever steps that are necessary. 6. The current state of the global banking sector also presents a story of uncertainty. While bank capitalisation has increased significantly in the post-crisis period primarily due to Basel III reforms, bank profitability has been lacklustre.
Both macroeconomic and bank-specific factors have contributed to this phenomenon. Importantly, banks are also facing increasing competition from non-traditional players, such as FinTech and BigTechs, which are taking advantage of digital innovation. These developments have implications for financial stability in Emerging Market Economies (EMEs) like India. It is indeed imperative that banks capitalise on these technological advances and the associated business models.