Financial Stability Report-Bhutan - RMA
FinancialStabilityReport-BhutanBhutan 2015Financial Regulation & SupervisionDepartmentRoyal Monetary Authority
Purpose of the Financial Stability ReportAs per Section 7 of the Royal Monetary Authority (RMA) Act 2010, the primary objective ofBhutan’s Central Bank is to formulate and implement monetary policy in order to achieveprice stability. However, Section 8 clearly states the maintenance of financial stability asanother objective of the RMA. Specifically, the Act empowers the RMA to ‘formulate andapply financial regulations and prudential guidelines to ensure the stability and integrity ofthe financial system’; and ‘promote sound practices and good governance in the financialservices industry to protect it against systemic risk’. This would in turn promote macroeconomic stability and economic growth in the country.The RMA uses the Financial Stability Report (FSR) in pursuit of this objective. The FSR isintended to serve as a regular report identifying: macro-economic risks to financialstability; existing frailties in the financial sector and vulnerabilities to plausible andimplausible risks; and latest developments in financial regulation and infrastructure.Additionally, it provides a starting point for a discussion on financial stability by differentstakeholders-including banks and other financial institutions, and the government. The FSRis also a tool for building public confidence in the strength of the financial system.
Table of ContentsChapter IMacro-Financial Risks to Financial Stability1.1 Financial Sector Overview1.2 Credit to GDP and Interconnectedness in Financial System1.3 India1.4 Domestic Development1.5 External Sector VulnerabilitiesChapter IIFinancial System Stability: Soundness and Resilience2.1 Banking Sector2.1.1Performance2.1.2 Soundness2.1.3 Asset Quality2.1.4 Credit Concentration Risk2.1.5 Implementation of Loan to Value Ratio to Mitigate the Risk of a Housing Market Downturn2.1.6 Maximum Loan Ceiling for Personal Loans2.1.7 Satisfactory Loss Absorption Capacities2.1.8 Profitability2.2 Resilience - Stress Tests for Credit Risk2.3 Maintenance of Satisfactory Liquidity Levels2.3.1 Liquidity Management2.3.2 Liquidity Policy Instruments2.3.3 Management of Commercial Bank Liquidity2.3.4 Liquidity Stress Test2.4 Non-Banks2.4.1 Capital Adequacy2.4.2 Asset Quality2.4.3 ProfitabilityChapter IIIMacro-Prudential Regulations3.1 Summary of Macro-prudential Regulations3.2 ConclusionChapter IVRecent Activities and Developments in Financial Sector Regulation4.1 Investment Guidelines for Insurance Business4.2 Credit Information Bureau Regulations4.3 Base Rate System4.4 Reserve Management Policy4.5 Payments and Settlement System4.6 Central 262727293031313233333436383838383939404041
List of AbbreviationsAbbrv.Full FormAbbrv.Full FormBILBFSBNBBOBBhutan Insurance LimitedBhutan Financial SwitchBhutan National BankBank of BhutanLCRLTILTVNEFTLiquidity Coverage RatioLoan to IncomeLoan to valueNational Electronic FundTransferCARCapital Adequacy RatioCIBCredit Information BureauNFSNPLNPPFCPIConsumer Price IndexNSFRNational Financial SwitchNon-performing loansNational Pension and ProvidentFundNet Stable Funding RatioCash Reserve RatioDruk Punjab National BankElectronic Fund Transfer andClearing SystemFinancial Regulation andSupervision DepartmentPCRPRRICBGross Domestic ioning Coverage RatioPrudential RegulationsRoyal Insurance Corporation ofBhutanRoyal Monetary Authority ofBhutanReturn on assetsReturn on EquitySectoral Capital RequirementsStatutory Liquidity RatioUS Dollar
Chapter IMacro-Financial Risks to Financial Stability1.1 Financial Sector OverviewBank of Bhutan Limited and BhutanFinancial system of Bhutan is still at itsDevelopment Bank Limited and three areinitial stage with lots of structuralprivate, Bhutan National Bank Limited, T-deficiencies.Bank Limited and Druk Punjab NationalThedevelopmentofBhutanese financial system until 2009Bankwas limited to only two banks, onecompaniesagriculturaloneCorporation of Bhutan Limited (RICBL)insurance company accompanied by aand Bhutan Insurance Limited (BIL).small stock exchange and a Pension FundThese two insurance companies competeBureau. Beginning 2009, major changeswith banks in terms of rendering theirhave occurred in the financial system. Inservices of lending to the people. The2009, two new banks and one insuranceNational Pension and Provident Fundcompanywere(NPPF) responsible for managing Insurancecivilgovernmentservants,ownedgranted a specialized deposit-taking bankcorporations, joint sector companies, andlicense in 2010 to expand its business toarmed forces is also allowed to performthe urban areas. The Royal Monetarylimited lending to their members. InAuthority (RMA) is the central bank of2013, RMA granted license to firstBhutan and is also responsible forreinsurance company, GIC-Bhutan Re tosupervision of financial institutions titutions that are currently authorizedbytheRMAtoperformlendingoperations. These include five banks, usinessinGDPandinFinancialinsurance companies, and a pension fund.1.2.1 Credit-to GDPOf the banks, two are government owned,The credit-to-GDP gap is a measure thatprovides signals of banking system stress1
and can be used as a part of central bankgap has reduced from 0.38 percent topolicy tools to mitigate banking system0.05 percent during the same periodrisk. For example during recession, losses(0.90 percent credit-to-GDP in 2014).in the banking sector can be massiveFigure 1: Credit –to-GDP Ratioby a period of excessive lending/creditdestabilize the banking sector and thisinstability can further spread throughoutthe economy which then feeds back to thebanking sector. One way of protecting thebanking sector from the crisis is to havethe banks build up additional capitalCredit to GDP (%)(i.e. a credit bubble). These losses .0040.008.007.006.005.004.00Gap (%)when an economic downturn is 142015buffer. Basel III regulatory frameworkrequiresbankstobuildGapupCredit to GDPa countercyclical capital buffer to ensurethatthebankingsectorcapitalThe credit-to-GDP ratio (including bothrequirements take account of the macro-credit to public and private sectors)financial environment in which theyincreased to 52.13 percent in Decemberoperate.2015 as compared to 49.79 percent inThe credit-to-GDP ratios of private sectorand public sector in Bhutan stood at 51.17percent and 0.96 percent respectively asof December 2015. As for the credit-toGDP gaps, the positive gap in the privatesector has grown by 2.28 percent inDecember 2015 as compared to thenegative gap of 1.93 percent in December2014 (48.89 percent credit-to-GDP ratioin 2014), while in the public sector the2previous year generating a positivecredit-to-GDP gap of 2.34 percent. Giventhat the credit-to-GDP gap is not verysignificant (as the gap has not exceeded500 basis points to implement thecounter-cyclicalcapitalbufferrequirement under the Macro-prudentialRegulations), it is judged that alsystemrisksinarenotconsiderably high. However, not only is a
private credit-to-GDP ratio high andrelationship over the years. On averagegrowing, but the credit-to-GDP gap inbetween 2003-2004 and 2014-2015, thepublic sector is also positive, thus, moreIndian Government provided 65.6 percentcautionof all budgetary grants available to theisneededconcerningthepossibility of future build-up of risks.Royal Government of Bhutan (RGoB).There are three ways by which India’seconomic1.2.2 nnectedness matrix shows that sfinancialinstitutions reached Nu. 117.45 billion(USD 1.11billion)1circumstancescanaffectBhutan-growth, inflation and exchangerate.The Article IV Consultation in Bhutanestimated a long run macro-econometricmodel for Bhutan concluding that anyas of December 2015,slowdown in India can have spilloverup by about Nu. 7.82 billion compared toeffects in Bhutan. Higher growth in Indiathe end of 2014 (Nu. 109.72 billion). Byfor instance would have the potential tosector, the volume of interconnectednessenergizeacross banking sector and non-banks hadmerchandise and service exports likeincreased by Nu. 4.95 billion (5.10tourism.Higher growth would alsopercent) and Nu. 2.87 billion (22.81translateintopercent) respectively during the periodgovernment of India to provide timelyunder ydropowerforthefinancing.Inflation and exchange rate movements in1.3 IndiaIndia, both have the potential to affect1.3.1 Relevance to Bhutaninflation in Bhutan since a majority of itsIndia is Bhutan’s largest trade partner.imports are from the former.67.8 percent of the country’s externalWhen the Indian currency depreciates,debt is denominated in Indian Rupees.Indians have to pay more for theirMoreover, the respective governments ofimports. This is likely to affect domesticthe two countries have shared a cordialinflation in India. In turn, this may be12015 end exchange rate was Nu. 67.45 for a USD3imported into Bhutan. More directly,
since Bhutan’s exchange rate is pegged toand manage inflationary pressures andIndia’s currency, a weaker rupee alsorequisite capital flows on the other,means a weaker Ngultrum. Hence, Bhutansluggishness in domestic demand andcan also end up importing inflation fromprivate investment call for higher publiccountries other than India.investment in order to accelerate the paceof growth.1.3.2 Outlook in India2Indian economy remained resilient in aAverage inflation at 5.9 per cent duringglobal environment characterized by2014-2015 turned out to be significantlyfalling macroeconomic risks. GDP pickedlower than 9.5 per cent a year ago. Fromup in 2014-2015, rising by 7.3 per cent onJune 2014, inflation declined faster thantop of a growth of 6.9 per cent in 2013-initially anticipated. A combination of2014. The firming up of growth duringfavorable factors such as the collapse of2014-2015 was driven mainly by privateinternationalconsumption and supported by fixedparticularly of crude, and loss of ongcorporateprices,duetoconsumption and net exports slackenedweakening demand as well as pro-activeconsiderably. Even though, the weaknesssupply management and deregulation ofin external demand has adversely affectedkey fuel prices worked in alignment withits exports, current account deficit (CAD)a disinflationary monetary policy stanceas a percentage of GDP has remained atthat was set from September 2013.comfortable level, and current account1.3.3 Maintaining exchange rate peg ofdeficit narrowed in 2014-2015 from itsthe Ngultrum to the Indian Rupeelevel a year ago on terms of trade gainsand weak import demand. However,despiteimprovedmacro-economicfundamentals and resilience - given thechallenges for the rupee to maintainexternal competitiveness on the one handThe Ngultrum has been pegged at par tsthecontinuing dominance of bilateral trade(over 80 percent of total imports andclose to 90 percent of total exports) and2 RBI Annual Report and Financial Stability Report,201543RMA Monetary Policy Statement
financialflows(foreconomicdevelopmental aid and loans for hydro1.4 Domestic Development1.4.1 Output4power projects) from India, the peggedexchange rate continues to be the bestchoice of exchange rate policy – an anchorfor macroeconomic stability - guidingfiscal and monetary developments inThere are multiple ways in which outputaffects financial stability. Periods of‘prolonged (economic) prosperity’ cancause economies to transit from stable tounstableBhutan.systems5.financialThisisRapid credit expansion (that led to Rupeebecause growth induced optimism canoutflow) and import growth in the past hadcause borrowers to undertake riskiercontributed to huge external sector pressuresactivities and lenders to finance the same.on Bhutan’s Rupee reserves. The 2012Excessive lending, especially to riskyIndian Rupee shortages not only exposed(sub-prime) borrowers, can lead to non-the vulnerabilities of our heavily import-performingdependent structure but also revealedmarket illiquidity, and thus a creditchallenges related to the composition andcrunch. Lack of credit may in turnmanagement of reserves. While on theadversely affect economic activity andoneoftranslate into a real-side downturn.wasConversely, an economic recession canmaintained, on the other hand, severallead to financial instability by reducingexpensive Indian Rupee loans wereborrower incomes and impairing theavailed to meet the shortages. Thus,ability to repay loans.maintaining the stability of the exchange1.4.2 GDP ervesrate peg of the Ngultrum to the IndianRupee continued to remain one of thecornerstones of RMA’s monetary andreserve management policy in aveimproved since the slowdown broughtaboutbythe2012IndianRupeeshortages in the Bhutanese financial4 Most provision of this section has been sourced fromthe RMA annual report 2014/155Minsky, H. P. (1992).The Financial InstabilityHypothesis.Working Paper No. 74. New York, TheJerome Levy Economics Institute of Bard College.5
markets. The economy in 2015 achieved aexpenditures, which grew by 22.9 percentreal GDP growth of 6.5 percent. Theand 10.2 percent, respectively. On thegrowththeresource front, total revenue (includingsecondary sector with a contribution ofgrants) decreased by negative 3.8 percent3.5 percentage points. The contribution ofin 2014-2015, compared to the 23.4the tertiary sector has fallen from 3.8 topercent growth in 2013-2014 (from Nu.2.437.8 billion to Nu. 36.4 hecontribution of the primary sector hasincreased from 0.3 to 0.6 percentageFigure 2: Gross Domestic Product (GDP)points. In nominal terms, GDP increased12025by 10.4 percent to Nu.132 billion in 201510020from Nu.119.5 billion in 2014.8015601.4.3 Government Finance1040520High and sustained fiscal imbalances canadversely affect financial stability through0%201120122013201420150%Primary Sectorvarious channels. One, monetization ofSecondary SectorTertiary Sectorthe fiscal deficit by the Central Bank can% Growth, Primary (right y-axis)% Growth, Secondary (right y-axis)cause inflation, which if unpredictable,% Growth, Tertiary (right y-axis)can hinder financial decisions. Two, iffiscal deficits translate into burgeoningFigure 3: Composition of Nominal GDPdebt, risks of sovereign default may arise.107.9According to the revised budget forfiscal policy stance of the governmentcontinued to be progressive, with totalexpenditure increasing by 17 percent(from Nu.33.5 billion in FY 2013-2014 toPer centfinancial year 2014-2015, the overall865.75.146.52.1202011 2012 2013 2014 2015Nu.39.2 billion) during the year. Theincrease was on account of growth inspending for both current and capital6Nominal GDP in Billions of Nu. (right y-axis)Real GDP Growth140120100806040200
Totalrevenuedecreasedby5.4inflows on the capital and financialpercentage points to 30.4 percent of GDPaccount are not adequate to cover thein 2014/15.As part of the fiscalsame, the RMA has to intervene tomeasures, new taxes, such as sales tax onmaintain the peg against the Indian rupee.telecom services and green tax on fuelwere introduced along with the revisionof sales tax and customs duty on import ofvehicles.Despite the government’s efforts topursue sustainable fiscal path over themediumtermthroughexpenditurerationalization and revenue enhancementmeasures, the revised budget of 20142015 resulted in an overall fiscal deficit ofNu. 2.8 billion (2.4 percent of GDP)compared to the Nu.4.2 billion surplus in2013-2014.External borrowings which are highlyconcessional are availed from bilateraland multilateral development partners.Meanwhile,alargeportionof theremaining resource gap was also financedthrough domestic sources.For instance, shortage of Rupee reserveshas plagued Bhutan’s economy sinceNovember 2011, when it was observedthat Rupee balances, taking into accountthe overdue debt obligations, had turnednegative. This was a structural problem inthe sense that the majority of thecountry’s reserves are denominated inconvertible currency (due to externalaid), while a large part of paymentobligations are denominated in rupees(payments for imports, repayment ofloans). As a result of negative Rupeereserves, the RMA resorted to sale of USD200 million worth of convertible currencyreserves to buy Indian Rupees to the StateBank of India in December 2011 at theprevailing market rate. An Indian rupeeshortage occurred again and for thesecond time the RMA sold 200 million1.5 External Sector Vulnerabilitiesfor Rs11 billion on 27 June 2013 to keepThe size of Bhutan’s balance of paymentsimports from India going, and to maintainassumes importance in context of thea minimum level of Indian rupee reserve.fixed exchange rate between IndianThe Indian rupee was also borrowed atRupees and Ngultrum. If Bhutan facescommercial rates between 2011 and 2013high current account deficits and theto finance current and financial accounts.7
Many import restrictions combined withand fiscal policies can directly impact theaccess control to the Indian rupee wasmagnitude and direction of the currentestablished in 2012 and 2013, whichaccount deficit.reducedandCurrent account deficit increased fromstemmed drastic depletion of the Indian28.2 percent of GDP in financial yearrupee reserve. With prudent reserve2013-2014 to 30.2 percent of GDP inmanagement, Indian Rupee Swap loanfinancial year 2014-2015. Trade deficitfrom the RBI was also fully liquidated inalso widened by 7.7 percent amounting toSeptember 2013.Nu.26.0 billion. Deficits continued toIndianrupeeoutflow1.5.1 Overall Balance of Payments(BOP)persist in the services and primaryincome accounts as well, while the usualsurplus in the secondary income (drivenIn the balance of payments, the currentby grants for budget support) decreasedaccount deficit continues to remainby 15.8 percent in the year.elevated in terms of GDP and the RMAThe capital and financial account balanceviews the current account deficit as theincreased by 22.9 percent to Nu.37.9biggest medium-term challenge for thebillion.economy. The experiences of the 2012hydropowerIndian Rupee shortages have clearlyincreased by 27.0 percent to Rupees 18.1demonstrated the vulnerabilities of ourbillion with an additional Rupees 9.6import-dependentbillion received as the grant teddisbursementsand the macro-financial links betweenAfter accounting for other financial rsandcapital and financialtranslated into imports, which in turnaccount surplus was not enough tocontributedsectorfinance the current account deficit with apressures on Bhutan’s Rupee reserves.subsequent drawdown in reserves by anAddressing this challenge will requireequivalent of Nu. 560.4 million.tohugeexternalmonetary and fiscal measures as well asother sector-specific policies and reforms.In particular, the stance of both monetary8
1.5.2 Balance of Payments with IndiaBhutan’s current account deficit withIndia increased from 24.4 percent of GDPto 25.1 percent in 2014-2015. The tradedeficit has widened from Nu.17.4 billionto Nu.19.0 billion. In the income account,budgetary grants increased from Rupees2.2 billion to Rupees 3.3 billion. Interestpaid on hydropower debt (Kurichhu andTala) amounted to Rupees 1.4 billionwhile accrued interest on the andMangdechhu) amounted to almost Rupees6.3 billion for the year. In the capital andfinancial account, grants for budgetsupport decreased from Rupees 7.1billion to Rupees 4.1 billion while grantsforhydropowerprojectsincreasedmarginally from Rupees 9.4 billion toRupees 9.6 billion.1.5.3 Reserves PositionGross international reserves fell to USD958.5 million as of June 2015 from USD997.9 million as of June 2014, althoughreserves were sufficient to finance 11.8months of merchandise imports whilealso covering 51.7 percent of publicexternal debt. Of the total, USD 788million was convertible currency reserves9while Rupees 10.9 billion was IndianRupees.Themanagementofreserves,inparticular of Indian Rupee reserves,remains one of the key challenges for theRMA because of the persistently highcurrent account deficit. RMA has setoperational threshold for convertiblecurrency reserves as part of the RMA’sreserve management policy to vesandotherconvertible currencies in line with theneeds for Indian Rupees. Addressing thechallenge of the current account ructuralaimedatchanneling investments into g productivity and building thedomestic supply and production base forincreasing exports.
Table 1: Overall Balance of Payments and Selected External IndicatorsNu. in Million2012/13 (r) 2013/14 (r) 2014/15 (p)ItemA. Current AccountUSD in Million2012/13 (r) 2013/14 (p) 2014/15 w. o.w. 4,170.5-26,021.6-377.5-393.2-419.4o.w. o.w. 439.7-11,341.7-165.6-121.0-182.8Trade BalanceExports (fob)o.w: Hydropower ExportsImports (fob)DebitPrimary IncomeCreditDebitBalance on Goods, Services & Primary IncomeSecondary IncomeCredito.w: Budgetary GrantsDebitB. Capital Accounto.w. Budgetary Grants, Credito.w. Hydropower Grants, CreditC. Financial Account1Direct investment in Bhutan: net incurrence of liabilitiesOther investment: net acquisition of assetsOther investment: net incurrence of liabilitieso.w. INR denominated hydropower loans2o.w. CC loans of the RGOBD. Net Errors & OmissionsE. Overall Balance (Reserve Assets)In % of GDPTrade Balance (Goods)Goods and services (net)Current Account BalanceOverall BalanceGDP at current prices3Memorandum Items:Gross International Reserves (end of period)4In months of merchandise importsShort term external debt as a % of Reserves5External Debt Outstanding (end of period)In percent of GDPDebt Service Ratio (including overdraft facility)Debt Service Ratio (excluding overdraft facility)Annual average exchange rate (Nu/USD)End of period exchange rate 1.560.1958.511.81854.698.919.819.862.163.81Net acquisition of financial assets minus net incurrence of financial liabilities; ( ) figure denotes net lending and (-) figure denotes net borrowing; excludes234reserve assets. Includes accrued interest. Calendar year GDP used (eg: CY 2014 FY 2014/15); Source: NSB. Excluding pledge on any outstanding5overdraft during the reference periods. Short term external debt defined as debt of original maturity of less than 1 year; eg - RBI Rupee swap and IndianRupee overdraft facility.Note: External debt includes only loan liabilities. Debt service ratio is in percent of exports of goods and services.10
1.5.4 External DebtBhutan’s total outstanding external debtincreased to an equivalent of USD 1.9billion as of June 2015 (5.4 percentgrowth between June 2014 to June 2015).Of this, an equivalent of USD 581.2 millionwas outstanding on convertible currencyloans and the remaining Rupees 81.2billion were outstanding Indian Rupeeloans. Of the total Rupee debt, 90.2percent were outstanding public debt onhydropower projects while 8.6 percentrepresented debt taken to finance BOPtransactions with India (the GOI line ofcredit).External debt denominated in rupees canbe another source of stress. As of 20112012, the first year when the Rupeeshortage became apparent, the totalexternal debt was USD 1.3 billion. Sincethen, it has been on increasing trend. Thiswill also translate into higher Rupeeoutgo on a yearly basis for debt servicing,especially when Punatsangchhu I, II andMangdechhu become operational and theschedule of repayment begins.11Within the convertible currency loanportfolio, concessional public and publiclyguaranteed debt accounted for 99.9percent while the remaining 0.1 percentrepresented outstanding external debt ofthe private remainswith67.8percent of overall external debt at Nu.80.2billion or 98.8 percent of total Rupeeoutstanding debt. This is followed by theADB with USD 259.2 million, the WorldBank with USD 165.4 million and theGovernment of Austria with USD 81.0million. Bhutan’s total debt outstandingstood at 98.9 percent of GDP.Overall debt servicing on both convertiblecurrency and Indian Rupee debt for 20142015 was USD 139.5 million as comparedto USD 178.9 million in 2013-2014.Bhutan’s debt service ratio measured as apercent of the export earnings from goodsand services decreased to 19.9 percent in2014-2015 from 27.1 percent in 20132014.
Table 2: IMF’S Debt Sustainability Analysis (DSA) 2014 and 20166The IMF uses two separate models for analyzing the debt sustainability of developing and low incomecountries and for emerging economies and industrialized countries. In the former case (applicable forBhutan), countries mainly resort to external loans on concessional terms. Hence an external debtsustainability analysis is perceived as being equivalent to a public debt sustainability analysis.The debt sustainability of a country is judged based on the performance of certain indicators relative topre-defined thresholds. If some or many of the indicators exceed the thresholds, it might signal a riskof debt being unsustainable. The performance is measured based on projections for a 20 year longhorizon. The thresholds vary with the perceived strength of a country’s policies and institutions.Countries with weak institutional frameworks may find difficulties in dealing with even low levels ofpublic debt. Hence for them the thresholds are lower as compared to countries with strong policiesand institutions. Bhutan is judged as having high quality of institutions and policies. The indicatorsused are as given below: Net Present Value of Public Debt as a % ofExportsGDPBudget RevenuesPublic Debt Service as a % ofExportsBudget RevenuesThe DSA 2014 shows that the present value of Bhutan’s external debt to GDP ratio would fall below25% over the long term. The present value of debt to exports and debt to revenue is also projected tofall below the respective thresholds in the long term. The debt service indicators are expected toremain below thresholds for most of the period under consideration, save for temporary breachescaused by hydropower debt. The ‘stress’ scenarios however indicate the presence of vulnerabilitieswith most of the indicators breaching the set thresholds under simulated shocks.Yet, the overall likelihood of risks to Bhutan’s debt sustainability remain moderate. This isbecause a large part of Bhutan’s external debt is to finance the construction and operating costs ofhydropower plants. These loans are taken from India on a concessional basis. Moreover, all surpluspower generated by the hydropower plants is bought by India at a pre-determined price. This is fixedafter the construction of the plant is over, on a cost-plus basis. This means that the price per unitcovers the cost of the project, financing costs, operation and maintenance charges, depreciation,market conditions as well as a net return of 15%. According to the IMF, such terms allow forhydropower loans to be treated as ‘non-debt creating’.6IMF,May 2014. Staff Report for 2014 Article IV Consultation-Debt Sustainability Analysis.IMF, June 2016, Staff Report for 2106 Article IV Consultation-Debt Sustainability Analysis.12
1.5.5 Inflationary RiskInflation can adversely affect financialstability by misleading agents about theirfinancial decisions. In a situation wherethe inflation rate exceeds the interestrate, individuals would be unlikely tosave, investors would be unlikely toinvest or lenders to lend. The resultantlack of credit in the market could hampereconomic activity which could translateinto increasing non-performing loans andquarter 2015, compared to 12.3 percentduring the same quarter last year. On theother hand, the general prices of non-foodit
Macro-Financial Risks to Financial Stability 1 1.1 Financial Sector Overview 1 1.2 Credit to GDP and Interconnectedness in Financial System 1 1.3 India 3 1.4 Domestic Development 5 1.5 External Sector Vulnerabilities 7 Chapter II 14 Financial System Stability: Soundness and Resilience 14 2.1 Banking Sector 14 2.1.1Performance 15
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ASTM E 989-06 (2012), Classification for Determination of Impact Insulation Class (IIC) ASTM E 2235-04 (2012) Standard Test Method for Determination of Decay Rates for Use in Sound Insulation Test Methods. Test Procedure. All testing was conducted in the VT test chambers at Intertek-ATI located in York, Pennsylvania. The microphones were calibrated before conducting the tests. The airborne .
