March 20, 2023

Why is the RBI’s close eye on Credit Suisse even after receiving a package of 54 billion dollars? , RBI’s keen eye on Credit Suisse after getting USD 54 billion package, why?

After Credit Suisse’s shares continued to fall, there were also reports of its sinking. Then the Swiss central bank ended the news by announcing a $54 billion package.

RBI eyes on Credit Suisse: The Reserve Bank of India is said to be closely monitoring all developments related to Credit Suisse Bank. Nevertheless, Credit Suisse received a bailout package from the Swiss central bank. According to people familiar with the matter, the bank’s exposure to India is very low. In such a situation it is impossible to have any influence. Credit Suisse has a limited presence in India, with only one branch and a 1.5 percent stake among foreign banks in the country Its share in banking assets is only 0.1 percent.

Local banks are down

Despite this limited presence, domestic banks and currency market traders have adopted a cautious approach and are avoiding any new counterparty risks to lenders. According to the report, Credit Suisse’s short-term G-Secs account for about 70 percent of its total assets in India. The country’s banks downgraded Credit Suisse’s internal rating, making it difficult for them to forge new business relationships with the lender. Now Credit Suisse will have to wait and see how long the Indian banking sector remains wary of the lender’s risk.

Read more: Can the Credit Suisse crisis raise India’s concerns? Why did this question arise?

First such bank in the world

Credit Suisse, Switzerland’s second-largest bank, became the first major global bank to receive an emergency credit line since the 2008 financial crisis. Shares of Credit Suisse have continued to fall, with reports of further declines. Then the Swiss central bank ended the news by announcing a $54 billion package.

Read more: Credit Suisse shares jumped 40% after the central bank bailout

The country has only 20 thousand crores of wealth.

According to data from US-based brokerage Jefferies, Credit Suisse, which accounts for 60 per cent of debt-financed assets in India, is only 0.1 per cent of the total assets of the Indian banking sector, estimated at around Rs 20,000 crore. According to the brokerage, due to Credit Suisse’s importance in India’s banking industry, counterparty risk is only in the derivatives market. According to the US brokerage firm, the Reserve Bank of India will closely monitor liquidity problems and intervene if necessary.

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