The Reserve Bank of India’s Financial Stability Report highlights resilience in the banking and financial system, projecting strong economic growth driven by domestic demand and investment. Stress tests confirm banks and NBFCs remain healthy, though external uncertainties and rupee depreciation pose near-term risks to India’s financial markets.
The Reserve Bank of India (RBI) has released its latest Financial Stability Report, offering a comprehensive outlook on the economy and financial sector. The report underscores robust fundamentals, strong capital buffers, and improved asset quality across banks, while acknowledging challenges from global spillovers and currency volatility.
Key highlights from the announcement include
-
Gross bad loan ratio of 46 banks is projected at 1.9% by March 2027 under the baseline scenario.
-
Capital to risk-weighted assets ratio (CRAR) is expected to remain strong at 16.8% by March 2027.
-
Stress tests affirm resilience of banks, NBFCs, mutual funds, and clearing corporations under adverse scenarios.
-
The Indian economy continues to grow strongly, supported by robust domestic demand and benign inflation.
-
The RBI Governor emphasized that banks and NBFCs remain healthy, bolstered by strong capital and liquidity buffers.
-
Financial markets, however, remain susceptible to global spillovers and external shocks.
-
The rupee fell 4.7% against the US dollar in 2025, following a 2.8% decline in 2024.
-
Near-term risks to the domestic financial system stem from external uncertainties, but guardrails are being strengthened.
The RBI’s findings reinforce optimism about India’s economic outlook, highlighting resilience in the financial system while recognizing external vulnerabilities. Strong fundamentals and robust buffers position India to sustain growth despite global challenges.
Sources: Economic Times, Business Standard, Mint, Moneycontrol