Amid the global economic uncertainties, the Reserve Bank of India (RBI) has indicated said that India continues to be a strong engine of global growth, supported by strong macroeconomic fundamentals, resilient banks and healthy corporate balance sheets.
In its Financial Stability Report (FSR) for June 2025, which it published on Monday, the central bank also flagged the global economy which is facing heightened risks and uncertainty as a result of volatile financial markets and trade tensions, and high levels of public debt. That said, it did say that India is navigating these challenges with considerable stability.
“Indian economy is resilient and remains globally relevant”
The RBI highlighted that core government bond markets remain volatile, influenced by fluctuating policies and geopolitical developments. Simultaneously, high asset valuations and debt levels globally are emerging as potential amplifiers of financial shocks.
Despite these external risks, India’s domestic economy continues to exhibit resilience. “The Indian economy remains a key driver of global growth, supported by sound macroeconomic fundamentals and prudent macroeconomic policies,” the RBI said.
Banking sector remains strong with low NPAs and high capital buffers
The central bank indicated that the strength of Scheduled Commercial Banks (SCBs) has improved considerably, with the following contributing strengths:
Strong capital buffers
Very low non-performing asset (NPA) ratios, at multi-decadal lows
Strong earnings performance
FSR stress test results revealed that most banks remain highly capitalised even in stress test macroeconomic scenarios, meaning that the financial system is really in good shape. This provides another level of confidence in the soundness and integrity of the financial system going forward.
Mutual funds, NBFCs, and clearing corporations pass stress tests
The FSR further examined the resilience of mutual funds, non-banking financial companies (NBFCs), and clearing corporations. The results confirm that these segments are still operationally and financially sound, thus reducing the likelihood of spillover into the financial system.
Financial conditions easing; corporate balance sheets healthier
The RBI noted that financial conditions in India have improved due to accommodative monetary policy and low volatility in the domestic market. Corporate balance sheets strengthening are also helping to preserve macro-stability and investor confidence.
The report offers an optimistic assessment of macro-financial stability in India, with a caveat for ongoing policy prudence and vigilance from global shocks that could have second-round effects on the Indian economy.
For the time being, the FSR maintains a clear message - India is resilient, its banks are strong, and its economy will remain one of the bright spots in the global growth map.
