Covid-19 impact: RBI asks banks to carry out detailed stress testing

Capital-raising, precautionary provisioning may be on cards

The Reserve Bank of India (RBI) has asked banks to carry out detailed stress tests due to the impact of Covid-19 on their books and put capital-raising plans with board approvals in place, if needed. 

This is the first major regulatory move by the central bank to ascertain the health of banks and take proactive measures to ring-fence them after the outbreak of the pandemic. The central bank in its communiqué to chief executive officers of banks on June 19 said stress tests would take into account three scenarios — baseline, medium, and severe stress — which will cover all key