Financial Stability Report: India’s economy remains the main driver of global growth, Reserve Bank of India says

In the context of global economic uncertainty, the Reserve Bank of India (RBI) said that India remains a powerful engine of global growth and has received strong macroeconomic fundamentals, flexible banks and healthy corporate balance sheets.

In the June 2025 Financial Stability Report (FSR) released on Monday, the central bank also marked the global economy, facing increasing risks and uncertainties due to volatile financial markets and trade tensions and high levels of public debt. That said, it does say that India is carrying out these challenges with considerable stability.

“Indian economy is resilient and remains relevant globally”

The Reserve Bank of India stressed that the core government bond market remains volatile, affected by policy volatility and geopolitical development. At the same time, global high asset valuation and debt levels are becoming potential amplifiers of financial shocks.

Despite these external risks, India’s domestic economy still shows resilience. “The Indian economy remains the main driver of global growth, supported by ambitious macroeconomic fundamentals and prudent macroeconomic policies,” the Reserve Bank of India said.

Banking remains strong with high NPA and capital buffers

The central bank said that the strength of the booked commercial banks (SCBs) has greatly improved, and the following contributions have been made:

• Strong capital buffer

• Very low non-performing assets (NPA) ratio at multi-year lows

• Strong revenue performance

FSR stress test results show that even in stress-tested macroeconomic schemes, most banks are still highly capitalized, which means the financial system is indeed in good condition. This provides another confidence in the soundness and integrity of the financial system in the future.

Mutual funds, NBFCs and clearing companies pass stress tests

FSR further examines the elasticity of mutual funds, non-bank financial companies (NBFCs) and clearing companies. The results confirm that these segments remain operationally and financially reasonable, reducing the likelihood of spillovers.

Financial conditions are alleviated; company balance sheets are healthier

The Reserve Bank of India noted that India’s financial situation improved due to adaptive monetary policy and low volatility in the domestic market. Strengthening the company’s balance sheet also helps maintain macro stability and investor confidence.
The report provides an optimistic assessment of India’s macro-financial stability and requires ongoing policy prudence and vigilance on global shocks, which could have a second round of impact on the Indian economy.
Currently, FSR has maintained a clear message – India is resilient, its banks are strong, and its economy will remain one of the highlights in the global growth map.