Financial System Vulnerable By Worsening Asset Quality, IMF Says
News: The IMF has said that India's financial system is facing worsening of bank asset quality and insufficient capital amid an economic slowdown. The fund added that an increase in government's involvement in the financial industry has left the government exposed to losses at banks and is impeding the country's economic growth. The IMF cited deterioration of bank asset quality and renewed pressure on systematic liquidity as the major near-term risk to the financial system. The fund has asked Indian regulators to relax a compulsory requirement for banks to hold government securities, claiming that the move will increase capital flow into other industries. Meanwhile, the IMF has forecast India's economy to increase 6% in 2013, after GDP climbed 4.9% in 2012.