New Delhi, June 30, 2025 — The Indian economy continues to stand out as a key driver of global growth, buoyed by strong macroeconomic fundamentals and prudent policy measures, the Reserve Bank of India (RBI) stated on Monday in its bi-annual Financial Stability Report (FSR).
Despite heightened global economic and trade policy uncertainties, which have put the resilience of the world economy and financial systems to the test, India’s financial sector remains stable, the central bank said.
“Financial markets remain volatile, especially core government bond markets, driven by shifting policy and geopolitical environment. Alongside, existing vulnerabilities such as soaring public debt levels and elevated asset valuations have the potential to amplify fresh shocks,” the RBI noted in its report.
The central bank emphasized that even amid a challenging international backdrop, India’s economy has continued to perform strongly.
“The domestic financial system is exhibiting resilience fortified by healthy balance sheets of banks and non-banks. Financial conditions have eased supported by accommodative monetary policy and low volatility in financial markets. The strength of the corporate balance sheets also lends support to overall macroeconomic stability,” the RBI said.
According to the FSR, the soundness of scheduled commercial banks (SCBs) has improved further, supported by robust capital buffers, a multi-decadal low in non-performing loans, and strong earnings.
Stress tests conducted by the RBI indicate that most commercial banks possess adequate capital reserves above the regulatory minimum, even in adverse stress scenarios. The report added that mutual funds and clearing corporations also remain resilient under stress testing.
The findings underscore the continued stability of India’s financial sector and its capacity to withstand global headwinds, bolstering its role as a pillar of global economic momentum.
