......The provocation to remember all this is the concern repeatedly expressed by our banking supervisor on the issue of the unhedged foreign currency exposures of Indian companies and the credit risks they can lead to. The Reserve Bank of India (RBI) has been addressing banks on this subject for almost a decade: the Deputy Governor’s address at the FT-Yes Bank International Banking Summit on 16 October and the governor’s second quarter review of monetary policy on 30 October also referred to it. This was followed up by a circular on 21 November stating that “unhedged forex exposure risks are not being evaluated rigorously and built into pricing of credit by banks. RBI wants action-taken reports on the subject from commercial banks before the end of this month.”......
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