As inflation in systemically important AEs turned out to be persistent rather than transitory, the third shock emanated in the form of aggressive tightening of monetary policy by the US Fed, and subsequent unrelenting appreciation of the US dollar. Spillovers to EMEs, and to India, were in the form of capital outflows, depreciation pressures on currencies, reserve losses and imported inflation.
In other words: building resilience into the financial system in good times may seem expensive, but over the long run it is the most cost effective thing to do. So the banking sector has withstood the Covid stress test pretty well. However, you and I know that not everything went smoothly in the financial system, as events in March last year showed.