This does not mean that NPAs will not rise in this economic slowdown. NPAs may indeed rise, as the Reserve Bank has pointed out. But given the strength of the banks’ balance sheets, that rise is not likely to pose any systemic risks, as it might in many advanced countries.
Risk assessment, however, is a continuous process and the stress tests need to be conducted taking into account the macroeconomic linkages as also the second round and contagion risks. The Reserve Bank intends to formalize this process by setting up an interdisciplinary Financial Stability Unit to monitor and address systemic vulnerabilities. India outlook Le me now conclude.