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Date : 30 Jun 2017
Annex 1: Systemic Risk Survey

The systemic risk survey (SRS), the twelfth in the series, was conducted during April-May 20171 to capture the perceptions of experts, including market participants, on the major risks presently faced by the financial system. The survey results indicated that global risks were perceived as medium risks affecting the financial system. The risk perception on macroeconomic conditions, institutional positions and other general risks have also been categorised in the medium risk category in the current survey. Market risks, however, have been perceived to be in low risk category in this survey. Except the macro-economic risks, perception about other risks in this survey have increased as compared to the last survey (Figure A.1.1).

Within global risks, the risks on account of global growth, sovereign contagion and commodity prices remained as medium risk. In the last half-year, the risk of global slowdown receded considerably. Within the macroeconomic risks group, risks on account of domestic growth, domestic inflation, capital flows, corporate sector, pace of infrastructure development, real estate prices and household savings were considered to be in medium risk category in the current survey. According to the respondents the risk from corporate sector, infrastructure development and fiscal deficit moved to the lower category. The respondents have rated the foreign exchange risk, equity price volatility and interest rate risk under medium risk category as part of the financial market risks. Among the institutional risks, the asset quality of banks, risk on account of capital requirement, credit growth and cyber risk were perceived as high risk factors (Figure A.1.2).

Majority of the participants in the current round of survey felt that the possibility of a high impact event occurring in the global financial system in the short term as well as in the medium term period is medium, while majority felt that possibility of occurrence of such event in the domestic financial system in the short term is low. However, close to half of the participants assign a medium probability to the occurrence of a high impact event occurring in the domestic financial system in the medium term. Most respondents continued to be fairly confident in the global financial system. There was a significant increase in the proportion of respondents in the current survey who were fairly confident of the stability of Indian financial system, while many had reflected in the last survey that they were very confident about the system (Chart A.1.1).

On the issue of likely changes in demand for credit in the next three months, the majority of the respondents were of the view that it will increase marginally. A majority of the respondents indicated that the average quality of credit would remain unchanged in the next three months (Chart A.1.2).

1 These surveys are conducted on a half-yearly basis. The first survey was conducted in October 2011.