The Committee on Financial Sector Assessment set up by the Government of India in September 2006, under the Chairmanship of Dr. Rakesh Mohan, looked into the financial health of all the banks including the cooperative banks and made recommendations for improvement of financial health and systems for attaining and maintaining financial stability.
(The example of external/foreign disturbances would be the appreciation of the US dollar because of the hike in the US Interest Rates to respond to its domestic compulsions). As regards the down-side of the exchange rate volatility, the same should be allowed to be handled by institutional mechanisms such as well-developed derivatives market.