Contingent Liability Management

A Study on India

image of Contingent Liability Management
The sharp increase in the contingent liabilities of many developing countries in recent years and its possible implications has prompted a rethink in the way governments quantify their financial burdens.

This publication looks at some of the issues germane to the identification, monitoring and valuation of external sector contingent liabilities of India. By focusing mostly on externalsector related contingent liabilities that involve possible financial transactions with nonresidents, the document defines a framework for use in quantifying contingent liabilities, which can be adapted to other countries.

This publication is the second in a series produced by the Commonwealth Secretariat on debt and debt related issues.



Contingent Liabilities Relating to Banking, Financial Institutions and the Corporate Sectors of India

Given the gradual process of capital account liberalisation in India, external liabilities that can be incurred by banks are subject to the Reserve Bank's regulations, which involve the specification of capital, gap, reserve and open position requirements. The important sources of contingent external liabilities that can arise in the Indian context, together with some of the specific prudential and reporting requirements.


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