RBI releases the Financial Stability Report, June 2025

**Executive Summary** This document is a press release from the Reserve Bank of India (RBI), dated June 30, 2025, announcing the 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) on the resilience of the Indian financial system and risks to financial stability. **Key Points / Main Content** *Global Economy and Financial System:* * Elevated economic and trade policy uncertainties are testing the resilience of the global economy and the financial system. * Financial markets remain volatile, especially core government bond markets, driven by shifting policy and geopolitical environment. Existing vulnerabilities such as soaring public debt levels and elevated asset valuations have the potential to amplify fresh shocks. *Indian Economy and Financial System:* * Despite an uncertain and challenging global economic backdrop, the Indian economy remains a key driver of global growth, underpinned by sound macroeconomic fundamentals and prudent macroeconomic policies. * 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 soundness and resilience of scheduled commercial banks (SCBs) are bolstered by robust capital buffers, multi-decadal low non-performing loans ratio and strong earnings. * Results of macro stress tests affirm that most SCBs have adequate capital buffers relative to the regulatory minimum even under adverse stress scenarios. Stress tests also validate the resilience of mutual funds and clearing corporations. * Non-banking financial companies (NBFCs) remain healthy with sizable capital buffers, robust earnings and improving asset quality. * The consolidated solvency ratio of the insurance sector also remains above the minimum threshold limit. **Impact Analysis** * **Scheduled Commercial Banks (SCBs)** **Impact** * SCBs must maintain robust capital buffers and low non-performing loans to remain resilient. * Results of macro stress tests affirm that most SCBs have adequate capital buffers relative to the regulatory minimum even under adverse stress scenarios. **Action Required** * Ensure adequate capital buffers and maintain low non-performing loans. * Monitor and manage stress test results. * **Non-Banking Financial Companies (NBFCs)** **Impact** * NBFCs must maintain sizable capital buffers, robust earnings, and improving asset quality to remain healthy. **Action Required** * Maintain sizable capital buffers and improve asset quality. * **Insurance Sector** **Impact** * The consolidated solvency ratio of the insurance sector must remain above the minimum threshold limit. **Action Required** * Ensure the solvency ratio remains above the minimum threshold. * **Mutual Funds and Clearing Corporations** **Impact** * Resilience of mutual funds and clearing corporations must be validated through stress tests. **Action Required** * Prepare for stress tests.

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