The economic and financial costs of allowing financial vulnerabilities to build are simply too high, as warned by RBI Governor Sanjay Malhotra

Analysis

People may accept the Governor’s warning because it resonates with recent memories of the NPA episode, where delayed action was blamed for higher fiscal strain. However, the claim can be oversimplified: not every vulnerability leads to a crisis, and prudent regulation can mitigate costs without necessarily imposing immediate heavy burdens. The nuance lies in distinguishing between manageable risk buildup and systemic threats that truly threaten stability. Highlighting the high cost matters for readers because it underscores the importance of ongoing vigilance and proactive macro‑prudential policies, rather than complacency during calm periods.