RBI releases the Financial Stability Report, June 2025

**Executive Summary** This document is a press release from the Reserve Bank of India (RBI) announcing the release of the Financial Stability Report (FSR), June 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. The press release is dated June 30, 2025. **Key Points / Main Content** * **Global and Financial Market Conditions:** * Elevated economic and trade policy uncertainties are testing the resilience of the global economy and the financial system. * Financial markets remain volatile due to shifting policy and geopolitical environment, with vulnerabilities like high public debt and asset valuations. * **Indian Economy and Financial System:** * The Indian economy remains a key driver of global growth, supported by sound macroeconomic fundamentals and policies. * The domestic financial system shows resilience due to healthy balance sheets of banks and non-banks. * Financial conditions have eased supported by accommodative monetary policy and low volatility in financial markets. * Corporate balance sheets contribute to overall macroeconomic stability. * **Banking and Financial Institutions:** * Scheduled commercial banks (SCBs) are sound and resilient, with robust capital buffers, low non-performing loans ratio, and strong earnings. * Macro stress tests indicate that most SCBs have adequate capital buffers even under adverse conditions. * Stress tests 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 is above the minimum threshold limit. **Impact Analysis** **Stakeholder: Global Economy and Financial System** * **Impact:** The global economy and financial system are affected by economic and trade policy uncertainties, potentially impacting the resilience of the system. * **Action Required:** Monitor economic and trade policy developments and assess their potential impact. **Stakeholder: Indian Economy** * **Impact:** The Indian economy is seen as resilient and a key driver of global growth, but still influenced by external factors. * **Action Required:** Maintain sound macroeconomic fundamentals and prudent macroeconomic policies. **Stakeholder: Financial Institutions (Banks, NBFCs, Insurance Companies, Mutual Funds, Clearing Corporations)** * **Impact:** Financial institutions need to maintain capital buffers, manage asset quality, and undergo stress testing to ensure resilience. * **Action Required:** Maintain healthy balance sheets, conduct stress tests regularly, and adhere to regulatory requirements. **Stakeholder: RBI and FSDC** * **Impact:** The RBI and FSDC have assessed the financial stability of the Indian financial system. * **Action Required:** Continue monitoring the financial system, implementing appropriate policies, and conducting regular assessments.

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