The collapse of two American Banks – Silicon Valley Bank and Signature Bank recently has shattered the public confidence across the world and apprehensions in India too cannot be ruled out.
But what is reassuring is the ruling out of any such eventuality in Indian Banking system as a pioneer ChatGPT believes the Reserve Bank of India (RBI) will ensure such failures do not occur in India. For example, the RBI has strict guidelines in place to ensure the financial stability of Indian banks. There have been instances of banks failing in India in the past, but the RBI has taken swift action to minimise the impact on depositors and prevent systemic risks to the banking sector, according to the Artificial Intelligence-powered chat bot.
The ChatGPT response is strikingly similar to what Moody's has said about the impact of two US banks on the Indian banking sector.
According to Moody's, Indian banks are unlikely to suffer such losses because their funding and liquidity are sufficient to allow them to keep their HTM securities.
“In the last decade, Indian banks have faced significant solvency challenges, but their funding and liquidity have held up well, contributing significantly to their overall credit strength. The average liquidity coverage ratio (LCR) of Indian banks stood at a healthy 133% at the end of March 2022, which is understated because it excludes the majority of their cash reserves at the central bank, as well as portions of their holdings of government securities “'Moody,' he says.
Not only Indian banks, but most banks in Asia Pacific, according to the investment bank, are not exposed to failed US banks, and only a few institutions have minor exposures. Another significant difference between US banks such as SVB or Signature is that depositors with US banks are mostly corporates, whereas deposits with Indian banks are mostly personal savings.
In light of the crisis, IT Minister Chandrasekhar has assured Indian start-ups that had been banking with the failed Silicon Valley Bank that the government is looking into the possibility of extending credit lines to those units. The government is also attempting to facilitate the transfer of these start-ups' US dollar deposits to Indian banks. It is clear that the chat bot's response was heavily influenced by form inputs gathered from various sources, including Moody's. It is also possible to speculate on who followed whom, especially since rating agencies have increasingly faced criticism that their views are frequently mirrored. However, one thing is certain: AI-powered chat bots are here to stay.
Swarup stated on Twitter that the AI bot acknowledged that finding a solution acceptable to both parties is a difficult task, but that it can suggest a possible mediation solution. It stated that negotiations between the two countries' leaders should aim to find common ground and establish a framework for future cooperation. It also requested economic assistance from global financial institutions such as the International Monetary Fund (IMF) and the World Bank to help Ukraine's economy stabilise.
The solution also urged Russia to recognise Ukraine's sovereignty and territorial integrity, as well as to collaborate with its neighbour to protect the cultural rights of Russian speakers in Ukraine, such as allowing the use of the Russian language in education and public life. The chatbot also advocated for the withdrawal of military forces from the conflict zone and the establishment of a border demilitarised zone.
