EU BANK STRESS TESTS

The much talked about test, the EU test of banks' ability to withstand financial shocks, is being highly criticized as too easy after only 7 out of 91 failed. European Union policymakers and regulators voiced relief at results but some market analysts and many media commentators derided the whole exercise in which all listed banks passed as lacking in credibility. There was skepticism about EU regulators' conclusion that banks need only a total of 3.5 billion Euros ($4.5 billion) in extra capital.

Only five small Spanish banks, Germany's state-rescued Hypo Real Estate and Greece's Atebank failed outright. More than a dozen others scraped through with just over the required 6 percent of Tier 1 capital in the most stressful scenario and are likely to come under market scrutiny. However, the wealth of data disclosed by banks representing 65 percent of assets, and the commitment of banks, regulators and governments to follow-up action may well outweigh doubts about the stringency of the tests.

Financial Inclusion in India

Financial inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups.As banking services are the nature of public good,it is essential that availability of banking and payment services to entire population without discrimination is the prime objective of the public policy.

Challenges for Reserve Bank of India

The market is waiting for action of RBI on its coming annual monetary policy on 20nd April 2010.Analysts expecting that firm actions to be taken by RBI against inflation.

India right now has one of the highest inflation rate in the world and RBI seems to be behind the curve despite it started action of exiting its monetary policy ahead of other central banks.As per the weekly data by The Economist,out of 42 major economies only Venezuela seems to have more pressing inflation problem than India.

To exit or not to..

Continuining with what Ankur posted, i thought it will be more relevant to see the overall monetary and fiscal position. So i tried to delve in the issue and tried to find out what needs to be done on both the front. Loose fiscal policies are hurting the fiscal position while a tighter monetary policy might risk growth. Last week, finance secretary came out with a statement that too much of stimulus is injurious to health. This indicates the view from some quarters that it is time to withdraw the stimulus. However i feel that the withdrawal of the stimulus should be gradual and in a phased manner, in order to ensure sustained economic recovery.