Central bank flags global volatility, but reaffirms India’s robust banking and financial ecosystem
Amid rising global economic uncertainties, the Reserve Bank of India (RBI) has said that India continues to be a key engine of global growth, underpinned by solid macroeconomic fundamentals, resilient banks, and strong corporate balance sheets.
In its June 2025 edition of the Financial Stability Report (FSR) released on Monday, the central bank acknowledged that the global economy is navigating through heightened risks stemming from volatile financial markets, trade tensions, and elevated public debt levels. However, it asserted that India is navigating these headwinds with considerable stability.
“Indian economy is resilient and remains globally relevant”
The RBI highlighted that core government bond markets remain volatile, influenced by fluctuating policies and geopolitical developments. Simultaneously, high asset valuations and debt levels globally are emerging as potential amplifiers of financial shocks.
Despite these external risks, India’s domestic economy continues to exhibit resilience. “The Indian economy remains a key driver of global growth, supported by sound macroeconomic fundamentals and prudent macroeconomic policies,” the RBI said.
Banking sector remains strong with low NPAs and high capital buffers
The central bank noted that the strength of Scheduled Commercial Banks (SCBs) has improved significantly, driven by:
According to stress test results included in the FSR, most banks remain well-capitalised even under adverse macroeconomic scenarios, providing an additional layer of confidence in the financial system’s soundness.
Mutual funds, NBFCs, and clearing corporations pass stress tests
The FSR also assessed the resilience of mutual funds, non-banking financial companies (NBFCs), and clearing corporations. The findings confirm that these segments continue to maintain operational and financial strength, reducing the risk of spillovers into the broader financial ecosystem.
Financial conditions easing; corporate balance sheets healthier
The RBI observed that financial conditions in India have eased, helped by accommodative monetary policy and relatively low market volatility. Strengthening corporate balance sheets are also playing a key role in preserving macroeconomic stability and investor confidence.
While the report paints an encouraging picture of India’s macro-financial stability, the RBI has called for continued policy prudence and close monitoring of global shocks that may have secondary effects on India’s economy.
For now, the FSR reiterates a clear message — India is resilient, its banks are strong, and its economy remains one of the brightest spots on the global growth map.
