**Executive Summary**
The Reserve Bank released the June 2025 issue of the Financial Stability Report (FSR) on June 30, 2025. This report reflects the assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) regarding the resilience of the Indian financial system and associated risks. The report highlights key observations and conclusions regarding the stability of the financial system.
**Key Points / Main Content**
* **Global Economic Environment:**
* Elevated economic and trade policy uncertainties challenge global economic and financial system resilience.
* Financial markets remain volatile, influenced by policy shifts and geopolitical factors, alongside existing vulnerabilities like high debt and asset valuations.
* **Indian Economy:**
* The Indian economy continues to be a key driver of global growth despite a challenging global backdrop, supported by strong macroeconomic fundamentals and policies.
* The domestic financial system exhibits resilience, fortified by strong bank and non-bank balance sheets, accommodative monetary policy, and low financial market volatility. Corporate balance sheet strength also contributes to macroeconomic stability.
* **Banking Sector:**
* Scheduled commercial banks (SCBs) demonstrate soundness and resilience due to robust capital buffers, low non-performing loans, and strong earnings.
* Macro stress tests confirm SCBs maintain adequate capital buffers above regulatory minimums even under stress scenarios. Stress tests validate the resilience of mutual funds and clearing corporations.
* **Non-Banking and Insurance Sectors:**
* Non-banking financial companies (NBFCs) remain healthy with sizable capital buffers, robust earnings, and improved asset quality.
* The insurance sector's consolidated solvency ratio remains above the minimum threshold.
**Impact Analysis**
**Stakeholder: Reserve Bank of India (RBI)**
* **Impact:** This report informs RBI's ongoing assessment and management of financial stability risks in the Indian economy.
* **Action Required:** Continue monitoring key indicators and implementing appropriate policies to maintain financial stability.
**Stakeholder: Scheduled Commercial Banks (SCBs)**
* **Impact:** SCBs should take note of the results of the macro stress tests and maintain adequate capital buffers and financial soundness.
* **Action Required:** SCBs should maintain capital adequacy and continue to manage risks effectively.
**Stakeholder: Non-Banking Financial Companies (NBFCs)**
* **Impact:** NBFCs continue to be healthy with stable asset quality.
* **Action Required:** NBFCs should continue to focus on maintaining healthy capital buffers, earnings and asset quality.
**Stakeholder: Insurance Sector**
* **Impact:** The insurance sector must maintain its solvency ratio above the minimum threshold.
* **Action Required:** Continue to adhere to regulatory requirements and manage solvency ratios.
**Stakeholder: Investors and Markets**
* **Impact:** Provides information about the stability of the Indian financial system.
* **Action Required:** To take the report into account while making investment decisions.
Key Entities Referenced
Financial Stability Report (FSR): A report reflecting the collective assessment on the resilience of the Indian financial system and risks to financial stability.
Reserve Bank of India (RBI): The central bank of India, responsible for releasing the Financial Stability Report.
Financial Stability and Development Council (FSDC): The sub-committee whose assessment is reflected in the Financial Stability Report.
Mumbai: Location of the Department of Communication, Central Office of the Reserve Bank of India.
Scheduled Commercial Banks (SCBs): Mentioned in the context of soundness, resilience, and macro stress tests
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