(RTTNews) - Larger than warranted capital requirements for banks would adversely impact the flow of credit to productive sectors, Reserve Bank of India Deputy Governor Shyamala Gopinath said Monday.

“Emerging economies are faced with the challenge of managing volatile capital flows which is not a source of systemic vulnerability for developed economies,” Gopinath said at the FSA Turner Review Conference in London.

According to the text of the speech published in the central bank’s website on Tuesday, she said, many of the emerging economies were part of the global effort to frame a harmonized framework to deal with major financial crisis. But, there are some key differences like a trade-off between financial stability and financial development in developed and emerging economies,

“For instance, with regard to identification and mitigations of sources of systemic risk, the emerging market concerns are heightened because of the fact that many sources of systemic risk lie outside their jurisdictions,” she said.

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