<h1>RBI's 2013 Financial Stability Report Warns of US Fed Taper Impact and Rising Banking Risks Amid Economic Challenges.</h1> The Reserve Bank of India's Financial Stability Report (FSR) for December 2013 highlights the impact of the US Federal Reserve's tapering of its bond purchase program starting January 2014, which could lead to market volatility. The report notes India's efforts to adjust its current account deficit and build foreign exchange reserves, although challenges like high inflation and fiscal deficit persist. The banking sector faces increased risks, with rising non-performing assets and stressed advances, particularly in sectors like infrastructure and mining. Regulatory reforms are underway, including reducing interconnectedness in the financial system and addressing gaps in interest rate derivatives markets.