Mumbai, Sept. 10: The Reserve Bank of India will soon come out with a financial stability report that will present an overall assessment of the health of the financial system. A regular feature, the report will also identify and analyse potential risks to systemic stability.

This report, a fallout of the global financial crisis of 2008, is part of the RBI’s step to pay more attention to financial stability and to improve its skills in this area.

The central bank feels in the days ahead India’s markets will deepen and broaden and the country will be exposed to the forces of globalisation which could have implications for its financial stability.

“We have set up a multi-disciplinary financial stability unit in the RBI and are planning to put out a regular stability report. The first report is planned in the next few months,’’ RBI governor Duvvuri Subbarao told bankers at the Ficci-IBA annual conference on global banking.

Subbarao said during the crisis, India’s financial sector remained safe. “It will be a folly to let that lull us into complacency and to believe there is something inevitable about India’s financial stability,” he said.

According to the RBI governor, there are certain features of our system which contributed to financial stability.

While banks are required to hold a minimum percentage of their liabilities (deposits) in risk-free government securities under the statutory liquidity ratio system, this has ensured that banks have liquidity during times of stress.

Subbarao said maintaining financial stability had thrown up some challenges. One such challenge is choosing between financial stability and growth.

He said tightening of risk weights to certain sectors tempered the flow of credit, but excessive, premature or unnecessary tightening could blunt growth. Similarly, exposure norms offer protection against concentration risks on a particular industry or borrower. However, such limits could restrict the availability of credit for important growth sectors.

Another challenge relates to whether there should be multiple regulators or a single one. While the Raghuram Rajan committee has recommended that regulation of all trading of financial products and instruments be brought under Sebi, Subbarao said, “We need to debate the advisability of such a unification.”

Subbarao also allayed fears that financial sector reforms might not proceed. “There is a concern that the crisis may have dented our enthusiasm for financial sector reforms. I believe that concern is misplaced. We will not slow down on reforms, but will surely rework the road map to reflect the lessons of the crisis,” he said.