**Executive Summary**
The Reserve Bank of India (RBI) released the June 2025 Financial Stability Report (FSR) on June 30, 2025. The report reflects the assessment by the Sub-Committee of the Financial Stability and Development Council (FSDC) on the Indian financial system's resilience and potential risks. The report highlights key vulnerabilities and strengths within the financial sector.
**Key Points / Main Content**
* **Global and Financial Environment:**
* Elevated economic and trade policy uncertainties are testing the resilience of the global economy.
* Financial markets remain volatile, particularly in core government bond markets, due to shifting policies and geopolitical factors, with existing vulnerabilities potentially amplifying shocks.
* **Indian Economy:**
* Despite global challenges, the Indian economy remains a key driver of global growth, supported by strong fundamentals and prudent policies.
* **Domestic Financial System:**
* The domestic financial system shows resilience, supported by healthy balance sheets of banks and non-banks, accommodative monetary policy, and low volatility.
* Corporate balance sheets also contribute to macroeconomic stability.
* **Scheduled Commercial Banks (SCBs):**
* SCBs have robust capital buffers, multi-decadal low non-performing loans ratio, and strong earnings.
* Macro stress tests show SCBs possess sufficient capital above regulatory minimums, even under stress.
* Stress tests also validate the resilience of mutual funds and clearing corporations.
* **Non-Banking Financial Companies (NBFCs) and Insurance Sector:**
* NBFCs maintain health with sizable capital buffers, robust earnings, and improving asset quality.
* The insurance sector's consolidated solvency ratio remains above the minimum threshold limit.
**Impact Analysis**
**Stakeholder: Global Economy and Financial System**
* **Impact:**
* The report identifies vulnerabilities and potential risks due to economic and trade policy uncertainties and volatility in financial markets.
* **Action Required:**
* Monitor and mitigate risks associated with economic uncertainties and financial market volatility.
**Stakeholder: Indian Economy**
* **Impact:**
* The report highlights the Indian economy's resilience amid global challenges and identifies key supporting factors.
* **Action Required:**
* Continue sound macroeconomic fundamentals and prudent macroeconomic policies.
**Stakeholder: Domestic Financial Institutions (Banks, NBFCs, Insurance Sector, Mutual Funds, Clearing Corporations)**
* **Impact:**
* The report assesses the health and resilience of these institutions.
* **Action Required:**
* Maintain adequate capital buffers, manage asset quality, and ensure resilience under stress scenarios.
**Stakeholder: Reserve Bank of India (RBI)**
* **Impact:**
* The report provides a comprehensive assessment of financial stability to guide policy decisions.
* **Action Required:**
* Use the report's findings to formulate and implement policies that promote financial stability.
Key Entities Referenced
Financial Stability Report (FSR): A report reflecting the collective assessment of the Sub-Committee of the Financial Stability and Development Council on the resilience of the Indian financial system and risks to financial stability.
Financial Stability and Development Council (FSDC): An organization whose Sub-Committee's collective assessment is reflected in the Financial Stability Report.
Reserve Bank of India: The central bank of India, responsible for releasing the Financial Stability Report.
Mumbai: Location of the Reserve Bank of India central office issuing the press release.
Scheduled Commercial Banks (SCBs): Referenced in the report as having adequate capital buffers.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट : www.rbi.org.in/hindi संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
June 30, 2025
RBI releases the Financial Stability Report, June 2025
Today, the Reserve Bank released the June 2025 issue of the Financial Stability
Report (FSR), which 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.
Highlights:
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. Alongside, existing
vulnerabilities such as soaring public debt levels and elevated asset valuations
have the potential to amplify fresh shocks.
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.
(Puneet Pancholy)
Press Release: 2025-2026/624 Chief General Manager