RBI releases the Financial Stability Report, June 2025

**Executive Summary** This press release, dated June 30, 2025, announces the Reserve Bank of India (RBI)'s release of the June 2025 Financial Stability Report (FSR). The FSR reflects the Financial Stability and Development Council's (FSDC) collective assessment of the Indian financial system's resilience and risks to financial stability. The report highlights the current state and resilience of the Indian economy amidst global economic challenges. **Key Points / Main Content** * **Global Economic Resilience:** Elevated economic and trade policy uncertainties are testing the resilience of the global economy and financial system. * **Financial Market Volatility:** Financial markets remain volatile, particularly core government bond markets, due to shifting policy and geopolitical environment, alongside existing vulnerabilities, can amplify shocks. * **Indian Economic Growth:** Despite global challenges, the Indian economy remains a key driver of global growth due to sound macroeconomic fundamentals and prudent policies. * **Domestic Financial System:** The domestic financial system demonstrates resilience, supported by healthy balance sheets of banks and non-banks, accommodative monetary policy, and low volatility in financial markets. * **Scheduled Commercial Banks (SCBs):** SCBs exhibit soundness and resilience due to robust capital buffers, low non-performing loans ratio, and strong earnings. * **Stress Test Results:** Macro stress tests confirm that most SCBs have adequate capital buffers, and also validate the resilience of mutual funds and clearing corporations. * **Non-Banking Financial Companies (NBFCs):** NBFCs remain healthy with substantial capital buffers, robust earnings, and improved asset quality. * **Insurance Sector:** The consolidated solvency ratio of the insurance sector remains above the minimum threshold limit. **Impact Analysis** **Stakeholder: Reserve Bank of India (RBI)** **Impact:** The RBI is responsible for assessing and maintaining financial stability in India, which impacts its monetary policies and regulatory oversight of financial institutions. **Action Required:** The RBI has released the Financial Stability Report as required. **Stakeholder: Scheduled Commercial Banks (SCBs)** **Impact:** SCBs must maintain adequate capital buffers and manage risks effectively to ensure continued resilience. **Action Required:** SCBs need to adhere to regulatory requirements for capital adequacy and risk management. **Stakeholder: Non-Banking Financial Companies (NBFCs)** **Impact:** NBFCs must maintain healthy financial metrics and asset quality to contribute to overall financial stability. **Action Required:** NBFCs must continue to manage capital buffers, earnings, and asset quality effectively. **Stakeholder: Insurance Sector** **Impact:** The insurance sector has to maintain solvency ratios above the minimum threshold limit **Action Required:** Continue to effectively manage solvency ratios.

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