The IMF report titled “India Financial System Stability Assessment” highlighted stress in the NBFC sector due to overexposure to power and infrastructure loans and interconnectedness with other markets.
o 63% of power sector loans were from the three largest Infrastructure Financing Companies (NBFCs) in fiscal 2024, up from 55% in 2019-20.
o State-owned NBFCs like IREDA face higher risks.
o In case of stagflation, Public Sector Banks (PSBs) may struggle to maintain a Capital Adequacy Ratio (CAR) of 9%, the minimum required by RBI for Scheduled Commercial Banks.
o The IMF recommends that PSBs should strengthen their capital base by retaining earnings instead of paying dividends to the government.
o Publishes reports like World Economic Outlook, Global Financial Stability Report, and Financial System Stability Assessment.
o Functions: Provides financial assistance, policy advice, and economic surveillance to member countries.
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The UPSC Civil Services Exam has three parts:
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