Ahead of the Reserve Bank of India’s fifth bi-monthly policy review for 2015-16, the CII – IBA Financial Conditions Index at 70.3 for Q3 FY 2015-16 shows healthy improvement in the overall financial conditions in the Indian economy vis-à-vis the previous quarter (67.8) owing to expectations of leading banks and financial institutions of reduction in cost of funds, strong liquidity position, better external financial linkages and an uptick in economic activity. The reading of the Index was significantly above the 50 mark implying a strong majority of the respondent banks and financial institutions reporting improvement or no change in the overall financial conditions as against deterioration vis-à-vis the previous quarter.