COVID, Sept. 28 -- 19 pandemic represents the biggest test of financial stability to the financial services sector. Pandemic constitutes unprecedented local as well as global macro-economic stress leading to slowed down economic conditions. Financial system in the country faces the dual challenge to sustain the flow of credit amidst declining growth and to manage the increased risks resulting due to changes in the economic landscape.

The depth and severity of financial shocks are often amplified by inadequate and low-quality capital in the financial services sector. On the other hand, many risks were not appropriately covered by a commensurate amount of capital, owing to weaknesses in banks' risk identification and assessment. It is ther...