## Capital Account Convertibility and Risk Management in India

_IMF Working Papers, October 1, 2007_

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**Canonical URL:** [Capital Account Convertibility and Risk Management in India](https://www.imf.org/en/publications/wp/issues/2016/12/31/capital-account-convertibility-and-risk-management-in-india-21364)

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## Bibliographic details
- Authors: Amadou N Sy
- Published: October 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451868142.001

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### Overview
- Purpose: Examine prudential and regulatory measures needed to prepare India's financial system to manage the risks arising from fuller capital account convertibility (FCAC).
- Contribution:
  - Reviews the potential and existing financial stability challenges to FCAC in India.
  - Studies how prudential regulation and supervision is addressing these challenges.
- Main conclusion: Regulatory and supervisory measures alone are not enough and will need to be complemented by improvements in Indian banks' risk management and further development of the domestic capital markets.

### Key Findings
- The paper identifies potential and existing financial stability challenges associated with FCAC in India.
- Prudential regulation and supervision are assessed for their effectiveness in addressing these challenges.
- Shortfall: Regulatory and supervisory measures by themselves are insufficient to manage the risks from FCAC.
- Recommended complementary measures include:
  - Improvements in Indian banks' risk management.
  - Further development of the domestic capital markets.

### Subjects and Keywords
- Subject: Asset and liability management, Banking, Capital account convertibility, Credit risk, Market risk
- Keywords: bank, derivative instrument, interest rate, market, risk, WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/capital-account-convertibility-and-risk-management-in-india-21364_