RBI releases the Financial Stability Report, June 2025

**Executive Summary** The Reserve Bank of India (RBI) released the June 2025 Financial Stability Report (FSR), reflecting 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. The report was released on June 30, 2025. The report highlights the resilience of the Indian financial system amidst global economic uncertainties. **Key Points / Main Content** * **Global and Financial Environment** * Elevated economic and trade policy uncertainties are testing the resilience of the global economy and the financial system. * Financial markets remain volatile, particularly core government bond markets, due to shifting policy and geopolitical environments. Existing vulnerabilities, like high public debt and asset valuations, could amplify shocks. * **Indian Economy** * The Indian economy remains a key driver of global growth, supported by sound macroeconomic fundamentals and policies despite a challenging global backdrop. * **Domestic Financial System** * The domestic financial system demonstrates resilience, supported by healthy balance sheets of banks and non-banks, accommodative monetary policy, and low market volatility. * The strength of corporate balance sheets supports overall macroeconomic stability. * **Scheduled Commercial Banks (SCBs)** * SCBs' soundness and resilience are fortified by robust capital buffers, low non-performing loan ratios, and strong earnings. * Macro stress tests confirm that most SCBs have adequate capital buffers above the regulatory minimum, even under adverse scenarios. The tests also validate the resilience of mutual funds and clearing corporations. * **Non-Banking Financial Companies (NBFCs) and Insurance Sector** * 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 is above the minimum threshold limit. **Impact Analysis** **Stakeholders:** **Scheduled Commercial Banks (SCBs), Non-Banking Financial Companies (NBFCs), Insurance Sector, Mutual Funds, Clearing Corporations** **Impact:** The stakeholders will need to maintain healthy balance sheets, and ensure capital buffers are above the regulatory minimum. They need to continue to implement sound macroeconomic fundamentals and prudent macroeconomic policies to maintain stability. **Action Required:** Monitor global and domestic financial stability. SCBs need to ensure capital buffers are maintained above the regulatory minimum under any stress scenarios. NBFCs must maintain their capital buffers and improve asset quality.

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