New Delhi, July 2 -- The Reserve Bank of India's (RBI) latestFinancial Stability Report presents an upbeat view of the country's financial system. Banks and non-bank financial companies are in good shape, says the report, adding that financial conditions have eased, supported by an accommodative monetary policy.

The trouble, however, is that 'financial conditions' are notoriously hard to assess. This is no surprise, since they are the outcome of a complex mix of factors.

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At the same time, they have an enormous bearing on the overall health of the system and hence on financial stability. This is where a 'financial conditions index' (FCI) of the type propose...