India should remain in a state of "full preparedness" to deal with any external sector vulnerability, Finance Ministry said after a meeting of the FSDC. The Financial Stability and Development Council (FSDC), which is headed by Finance Minister Arun Jaitley also discussed the rising bad loans of the banking sector and decided to set up a Resolution Corporation to deal with issues concerning closure of financial companies. The FSDC, whose members include RBI Governor Raghuram Rajan and other financial sectors regulators, said high volatility in the financial markets is one of the most prominent risks confronting the Emerging Market Economies.
However, India appears to be much better placed today on the back of improvement in its macroeconomic fundamentals and large forex reserves, which provides cushion against financial market volatility."Members agreed on the need to continue to be in a state of full preparedness for managing any external sector vulnerabilities," a statement said. The FSDC also deliberated on the issue of rising bank NPAs and corporate sector balance sheet stress wherein it noted the measures taken by Government and RBI for handling the stressed assets.
"It also discussed the impact of Bank NPAs and corporate sector balance sheet stress on bond market," the finance ministry statement added. Non performing assets at the end of March rose to Rs 2.67 lakh crore, from Rs 2.40 lakh crore at the end of March 2014.
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