A front-row view of RBI deputy governor’s mission to help banks survive NPA jams and build financial stability.

Beyond the headline-grabbing issues, the Indian economy is struggling to solve a critical problem: How to restore and maintain financial stability on a durable basis. In this book titled, Quest for Restoring Financial Stability in India, Former Deputy Governor of RBI, Dr. Viral V. Acharya, talks about his quest for restoring financial stability in India and offers a concrete plan for sustained improvement. Dr Acharya shares a feasible plan to address the recapitalization needs of public sector banks, offering solutions on how to improve credit allocation by credit intermediaries and establish viable and efficient capital markets. Elucidating the need-of-the-hour reforms, this book also raises several stark and unanswered questions related to the re-emergence of fiscal dominance in India, not just of monetary policy tools but also of banking regulations. It makes a persuasive case for striking the right balance between the government, centralbank, private sector and markets, in order to improve long-run growth prospects for the real economy.

Acknowledgements
Foreword by Dr Y. V. Reddy, Former Governor, Reserve Bank of India
Preface: Fiscal Dominance—A Theory of Everything in India
PART I Resolving Non-Performing Assets (NPAs) and Recapitalizing Banks
Some Ways to Decisively Resolve Bank Stressed Assets
A Bank Should Be Something One Can ‘Bank’ Upon
The Unfinished Agenda: Restoring Public Sector Bank Health in India
Prompt Corrective Action: An Essential Element of Financial Stability Framework
PART II Creating a Public Credit Registry
A Case for Public Credit Registry in India
Public Credit Registry (PCR) and Goods and Services Tax Network (GSTN): Giant Strides to Democratize and Formalize Credit in India
Some Reflections on Microcredit and How a Public Credit Registry Can Strengthen It
What Can India’s Banking System Learn from Shampoo Sachet Revolution?
PART III Incorporating the Financial Cycle in the Monetary Policy Framework
Monetary Policy under Changing Financial and Macroeconomic Environment
Managing the Financial Cycles in EMEs: A Central Banker’s Perspective
PART IV Improving Monetary Policy Transmission
Monetary Transmission in India: Why Is It Important and Why Hasn’t It Worked Well?
Improving Monetary Transmission through the Banking Channel - The Case for External Benchmarks in Bank Loans
PART V Developing Viable Capital Markets and Ensuring External Sector Resilience
Understanding and Managing Interest Rate Risk at Banks
Global Spillovers: Managing Capital Flows and Forex Reserves
Development of Viable Capital Markets: The Indian Experience
PART VI Striking the Right Balance: Enhancing the Autonomy of the Central Bank, the Markets and the Real Economy
On the Importance of Independent Regulatory Institutions: The Case of the Central Bank
Why Less Can Be More: On the Crowding- Out Effects of Government Financing
Epilogue