India's financial system sound, lenders should not be extremely risk averse: RBI Guv

Mumbai, July 24: The country's financial system is sound but lenders should desist from extreme risk aversion during COVID-19 pandemic and beyond, Reserve Bank Governor Shaktikanta Das said on Friday.

In his foreword to the bi-annual Financial Stability Report (FSR), Das said the top priority right now for banks and financial intermediaries should be for augmenting capital levels and improve resilience.

"In the evolving milieu, while risk management has to be prudent, extreme risk aversion would have adverse outcomes for all," Das said.

The financial system in India remains sound; nonetheless, in the current environment, the need for financial intermediaries to proactively augment capital and improve their resilience has acquired top priority, he added.