Even as we continue to see developments around a potential trade war between China and the United States, India\u2019s central bank RBI, in its latest Financial Stability Report, noted that evolving geopolitical developments and rising protectionist sentiments pose added risks. According to the apex bank, tightening of liquidity conditions in the developed markets alongside expansionary US fiscal policy and a strong US dollar have started to adversely impact emerging market currencies, bonds and capital flows. According to a Reuters report, the U.S. Treasury Department had been working on a proposal to ban acquisitions of U.S. firms with \u201cindustrially significant technology\u201d by companies with at least 25 percent Chinese ownership. Last week, the US administration had slapped 25% tariffs on $50 billion worth of Chinese goods that are imported into the US, prompting vows of swift retaliation from China. \u00a0"The US has kept changing its mind and now launched a trade war," China's Commerce Ministry said in response to the announcement. So, while there are global risks, the RBI also pointed out that on the domestic front, while economic growth is firming up, conditions that buttressed fiscal consolidation, inflation moderation and a benign current account deficit over the last few years are changing, thereby warranting caution. \u201cIn the domestic financial markets, structural shifts are altering the pattern of credit intermediation and impacting market interest rates. These developments call for greater vigilance on the domestic macroeconomic front to reinforce financial stability,\u201d RBI noted in its report. "The gross non-performing assets (GNPAs) in the Indian banking system is likely to rise from 11.6% in March 2018 to 12.2% by the end of March next year," said the RBI. \u201cMacro-stress tests indicate that under the baseline scenario of current macroeconomic outlook, SCBs\u2019 (scheduled commercial banks) GNPA ratio may rise from 11.6 per cent in March 2018 to 12.2 per cent by March 2019,\u201d the central bank noted.