RBI Report Highlights India's Financial Resilience
The Reserve Bank of India's June 2026 Financial Stability Report (FSR) affirms that India's financial system is robust and well-capitalised, capable of withstanding persistent global uncertainties. The FSR, which reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council, notes that global markets have largely absorbed recent shocks. "Despite repeated shocks, the global financial system has thus far demonstrated notable resilience, with markets remaining orderly after an initial bout of volatility following the outbreak of the West Asia conflict," the report states.
Global Risks Remain Elevated
Despite the orderly markets, the RBI warns that risks have not eased. "Nevertheless, global financial stability risks remain elevated," the central bank cautions. Persistent supply chain uncertainties could tighten financial conditions and revive inflation, while elevated public debt, bond market fragilities, stretched asset valuations, and leveraged non-bank financial intermediaries (NBFIs) remain key vulnerabilities.
India's Stronger Position
India's position is comparatively stronger. "India's sound macroeconomic fundamentals place it in a stronger position than many of its peers and provide greater resilience to external shocks than in past crisis episodes," the FSR says. The balance of risks has turned favourable due to the interim peace deal and recent policy steps to support capital inflows.
Banking System Stress Tests
The domestic financial system continues to show strength across sectors. "Domestic financial system remains resilient underpinned by strong bank and non-bank balance sheets," the report notes. Scheduled commercial banks are safe and sound, backed by strong capital and liquidity buffers, better asset quality, and stable profits. Stress tests indicate banks are prepared for adverse scenarios. "Macro stress test results indicate that the banking system remains well-positioned to absorb potential shocks, with aggregate capital ratios projected to remain comfortably above regulatory thresholds even under hypothetical adverse scenarios," according to the RBI.
NBFC and Insurance Sector Stability
Non-banks are also on solid ground. "Non-banking financial companies (NBFCs) remain financially sound, supported by strong capitalisation, healthy profitability, and improving asset quality," the report says. The insurance sector continues to maintain stability. "The insurance sector continues to display balance sheet resilience with the solvency ratio of life insurers remaining above the minimum threshold," it adds. Strong capital buffers, improving asset quality, and coordinated policy support are helping India's financial system navigate global headwinds.
