Demographic changes may cause systematic deviations in the number of deaths from their expected values. Unlike random variations around a fixed known mortality probability, this is a collective longevity risk that cannot be diversified across the individuals of a given cohort as it affects all of them in the same way. More sophisticated hedging mechanisms are therefore needed, possibly involving the public sector.
The recently released Financial Stability Report of the RBI highlights that the Indian financial system remains resilient and supportive of the ongoing economic revival. Banks are well-positioned to withstand even severe stress scenarios without falling below the minimum capital requirement. The Reserve Bank continues to remain watchful of the headwinds and shall be proactive in taking measures as necessary to ensure financial stability. 5.