RBI releases the Financial Stability Report, June 2025

**Executive Summary** The Reserve Bank released the June 2025 Financial Stability Report (FSR) on June 30, 2025. 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 the risks to financial stability. **Key Points / Main Content** *Global and Financial System Resilience* * Elevated economic and trade policy uncertainties test the resilience of the global economy and financial system. * Financial markets remain volatile, especially core government bond markets, driven by shifting policy and geopolitical environment, with vulnerabilities such as soaring public debt and elevated asset valuations. *Indian Economy* * The Indian economy remains a key driver of global growth, underpinned by sound macroeconomic fundamentals and prudent policies. *Domestic Financial System* * The domestic financial system exhibits resilience fortified by healthy balance sheets of banks and non-banks, supported by accommodative monetary policy and low volatility. * Scheduled commercial banks (SCBs) have soundness and resilience with robust capital buffers, low non-performing loan ratios, and strong earnings. * Macro stress tests affirm that most SCBs have adequate capital buffers relative to regulatory minimums, and 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 remains above the minimum threshold limit. **Impact Analysis** **SCBs** *Impact* * SCBs are shown to be generally resilient with adequate capital buffers. *Action Required* * SCBs should continue to monitor capital buffers and perform stress tests. **Mutual Funds and Clearing Corporations** *Impact* * Resilience of these entities has been validated. *Action Required* * Maintain the current level of resilience. **NBFCs** *Impact* * NBFCs are reported as healthy. *Action Required* * Maintain capital buffers, earnings, and asset quality. **Insurance Sector** *Impact* * The insurance sector's solvency ratio remains above the minimum threshold. *Action Required* * Maintain solvency ratio above the minimum.

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