Stretched valuations threaten financial stability: Shaktikanta Das

by Nidhi Bhati

In his foreward to the bi-annual financial stability report (FSR), Reserve Bank of India (RBI) Governor Shaktikanta Das flagged the growing disconnect between exuberant equity markets and real economic activity. Das warned about the stretched valuations of financial assets that pose risks to financial stability. Pointing to the interconnected nature of the financial system, the RBI Governor urged banks and financial intermediaries to be cognisant of the risk. He said that maintaining the health of the banking sector remains a policy priority and preservation of the stability of the financial system is an overarching goal.