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 financial system. * Financial markets remain volatile, particularly core government bond markets, due to shifting policies and geopolitical factors. Existing vulnerabilities like high public debt and elevated asset valuations could amplify shocks. *Indian Economy:* * The Indian economy remains a key driver of global growth, supported by sound macroeconomic fundamentals and prudent policies. *Domestic Financial System:* * The domestic financial system shows resilience with healthy balance sheets for banks and non-banks. Eased financial conditions, supported by accommodative monetary policy, and strong corporate balance sheets contribute to macroeconomic stability. *Scheduled Commercial Banks (SCBs):* * SCBs' soundness and resilience are strengthened by robust capital buffers, low non-performing loan ratios, and strong earnings. * Macro stress tests indicate that most SCBs have adequate capital buffers above regulatory minimums, even under adverse scenarios. The tests also validate the resilience of mutual funds and clearing corporations. *Non-Bank 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** **Stakeholder: Global Economy and Financial System** *Impact* The report highlights the challenges faced by the global economy and financial system due to elevated economic and trade policy uncertainties and volatile financial markets. *Action Required* Monitor and adapt to the evolving global economic and financial landscape. **Stakeholder: Indian Economy** *Impact* The report recognizes the key role of the Indian economy as a driver of global growth. *Action Required* Sustain sound macroeconomic fundamentals and prudent policies to support continued growth. **Stakeholder: Reserve Bank of India** *Impact* The RBI is responsible for assessing the stability of the financial system. *Action Required* Continue to monitor and take measures to maintain financial stability, particularly in the face of global uncertainties. **Stakeholder: Banks, Non-Bank Financial Companies, and Insurance Sector** *Impact* The report highlights the resilience and health of these financial institutions. *Action Required* Maintain robust capital buffers, manage asset quality, and adhere to regulatory requirements to ensure continued stability.

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