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 report 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 Markets:* * Elevated economic and trade policy uncertainties are testing the resilience of the global economy and financial system. * Financial markets remain volatile, particularly in core government bond markets, due to shifting policies and geopolitical factors; existing vulnerabilities amplify potential shocks. *Indian Economy:* * The Indian economy remains a key driver of global growth despite an uncertain global backdrop, supported by sound fundamentals and prudent policies. * The domestic financial system exhibits resilience, strengthened by healthy balance sheets of banks and non-banks, eased financial conditions, accommodative monetary policy, and low market volatility. *Scheduled Commercial Banks (SCBs):* * SCBs exhibit soundness and resilience due to robust capital buffers, low non-performing loan ratios, and strong earnings. * Macro stress tests show that most SCBs have adequate capital buffers even under adverse conditions, validating 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 insurance sector's consolidated solvency ratio remains above the minimum threshold limit. **Impact Analysis** * **Global Economy and Financial System** * **Impact:** Must remain adaptable and resilient in the face of ongoing uncertainties and potential shocks. * **Action Required:** N/A * **Reserve Bank of India (RBI)** * **Impact:** The RBI publishes the June 2025 Financial Stability Report (FSR), highlighting the resilience of the Indian financial system and potential risks to financial stability. * **Action Required:** The RBI should continue to monitor and assess the financial system's resilience, addressing any emerging risks identified in the report. * **Financial Stability and Development Council (FSDC)** * **Impact**: FSDC sub-committee provides a collective assessment on the resilience of the Indian financial system and risks to financial stability. * **Action Required**: N/A * **Indian Economy** * **Impact:** The Indian economy should maintain its growth trajectory, supported by macroeconomic stability and healthy financial conditions. * **Action Required:** N/A * **Scheduled Commercial Banks (SCBs)** * **Impact:** SCBs must maintain adequate capital buffers and manage asset quality to ensure resilience under adverse conditions. * **Action Required:** SCBs need to adhere to regulatory requirements and stress test results, taking necessary measures to mitigate risks. * **Non-Banking Financial Companies (NBFCs)** * **Impact:** NBFCs should sustain healthy capital buffers and asset quality to support overall financial stability. * **Action Required:** NBFCs must maintain healthy capital buffers and manage asset quality. * **Insurance Sector** * **Impact:** The insurance sector should maintain solvency ratios above the minimum threshold to ensure financial stability. * **Action Required:** The insurance sector must continue to monitor and manage solvency ratios to ensure they remain above the regulatory threshold.

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