RBI releases the Financial Stability Report, June 2025

**Executive Summary** This press release, dated June 30, 2025, announces the Reserve Bank of India's (RBI) release of the June 2025 Financial Stability Report (FSR). The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) regarding the resilience of the Indian financial system and its exposure to risks. The report highlights key observations on the stability and health of the financial sector. **Key Points / Main Content** *Global and Financial Resilience:* * Elevated economic and trade policy uncertainties are testing the resilience of the global economy and the financial system. * Financial markets remain volatile due to shifting policies and geopolitical environments. * Existing vulnerabilities like high public debt and elevated asset valuations could amplify fresh shocks. *Indian Economy and Financial System:* * Despite a challenging global backdrop, the Indian economy remains a key driver of global growth, supported by sound macroeconomic fundamentals and prudent policies. * The domestic financial system is resilient due to healthy balance sheets of banks and non-banks. * Financial conditions have eased, supported by accommodative monetary policy and low volatility in financial markets. * Strong corporate balance sheets contribute to macroeconomic stability. *Scheduled Commercial Banks (SCBs):* * SCBs' soundness and resilience are bolstered by robust capital buffers, low non-performing loans, and strong earnings. * Macro stress tests indicate that most SCBs have adequate capital buffers, even under adverse scenarios. * Stress tests validate the resilience of mutual funds and clearing corporations. *Non-Banking Financial Companies (NBFCs) and Insurance Sector:* * NBFCs remain healthy with sizable capital buffers, robust earnings, and improving asset quality. * The consolidated solvency ratio of the insurance sector remains above the minimum threshold limit. **Impact Analysis** **Scheduled Commercial Banks (SCBs):** *Impact* SCBs need to maintain robust capital buffers and continue monitoring and managing non-performing loans to ensure continued resilience. *Action Required* SCBs should continue to monitor macroeconomic conditions and implement risk management strategies to maintain financial stability, ensuring they have capital relative to the regulatory minimum even under adverse stress scenarios. **Non-Banking Financial Companies (NBFCs):** *Impact* NBFCs must sustain healthy capital buffers, earnings, and asset quality to ensure financial stability. *Action Required* NBFCs should maintain current strategies to ensure continued financial stability and to comply with regulations. **Insurance Sector:** *Impact* The insurance sector should continue to maintain solvency ratios above the minimum threshold limit. *Action Required* The insurance sector should continue to monitor and manage its solvency ratios to ensure they remain above the minimum threshold. **Mutual Funds and Clearing Corporations:** *Impact* Mutual Funds and Clearing Corporations need to continue to demonstrate resilience under stress scenarios. *Action Required* Maintain and continue to improve financial resilience under stress.

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