According to the Reserve Bank of India’s recent Financial Stability Report, the global economic recovery will lose speed in the second half of 2021 due to resurfacing Covid-19 infections, the new version Omicron, supply interruptions, and bottlenecks.
The Reserve Bank of India (RBI) extended the deadline for periodic Know Your Customer (KYC) updates in banks by three months, to March 31, 2022, on Thursday. The deadline was set to expire today.
The central bank stated in a circular that the decision was made because of the widespread uncertainty caused by the new form of Covid-19. In India, the novel strain Omicron has infected over 900 people.
The RBI extended the periodic KYC deadline to December 31 in May and instructed banks and other financial institutions not to impose any restrictions on the functioning of such accounts. The instructions were issued at the height of the second wave of the coronavirus disease (Covid-19), which was led by the Delta variant.
The RBI stated in the latest edition of the Financial Stability Report (FSR), released on Wednesday, that inflation and Omicron constitute significant risks to the Indian economy.
The study included a Systemic Risk Survey (SRS), which evaluated all broad categories of risks to the financial system – global; macroeconomic; financial market; institutional; and general – as medium in magnitude but ranked global and financial market risks higher.
According to the FSR’s 24th issue, “commodity prices, domestic inflation, equity price volatility, asset quality deterioration, credit growth, and cyber disruptions were rated as major risks.”
The central bank stated that the global economic recovery has slowed in the second half of 2021 as a result of resurfacing Covid-19 infections, the new variant Omicron, supply disruptions and bottlenecks, elevated inflationary levels, and shifts in monetary policy stances and actions in advanced and emerging market economies.
The FSR is produced every two years and includes contributions from all financial sector regulators. As a result, it reflects the collective assessment of the Financial Stability and Development Council’s (FSDC-SC) subcommittee on financial stability concerns.