RBI releases the Financial Stability Report, June 2025

**Executive Summary** The Reserve Bank released the June 2025 issue of the Financial Stability Report (FSR) on June 30, 2025. 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 the financial system. * Financial markets remain volatile, particularly in core government bond markets, due to shifting policies and geopolitical environments. Existing vulnerabilities, such as soaring public debt and elevated asset valuations, could amplify shocks. *Indian Economy:* * Despite global challenges, the Indian economy remains a key driver of global growth due to strong macroeconomic fundamentals and prudent policies. * The domestic financial system is resilient, supported by healthy balance sheets of banks and non-banks, accommodative monetary policy, and low financial market volatility. Strong corporate balance sheets support macroeconomic stability. *Financial Institutions:* * Scheduled commercial banks (SCBs) are sound and resilient, with robust capital buffers, low non-performing loan ratios, and strong earnings. * Macro stress tests confirm that most SCBs have adequate capital relative to regulatory minimums even under adverse scenarios, validating 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. **Impact Analysis** **Stakeholder: Reserve Bank** *Impact:* The Reserve Bank demonstrates its role in assessing and ensuring financial stability. *Action Required:* Continue monitoring and implementing policies that support the resilience of the financial system. **Stakeholder: Financial Institutions (Banks, NBFCs, Insurance Companies, Mutual Funds, Clearing Corporations)** *Impact:* Provides guidance on the stability of the financial sector. *Action Required:* Maintain adequate capital buffers, manage asset quality, and adhere to regulatory requirements. **Stakeholder: Indian Economy** *Impact:* Strengthens the stability of the Indian Economy *Action Required:* To continue to grow and remain a key driver of global growth due to strong macroeconomic fundamentals and prudent policies.

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