The Reserve Bank of India (RBI) reported that gold import growth slowed substantially in May 2026 compared to April, and identified AI-enabled cyberattacks as the most significant short-term threat to the financial system. Despite these threats, the central bank affirmed that banks remained safe and sound, supported by strong capital buffers.
Gold Import Growth Slows
In its June 2026 Financial Stability Report published on Tuesday, the RBI noted that India's macroeconomic foundations serve as a cushion against outside shocks. However, supply-chain interruptions and shocks to energy prices continue to pose threats to the economy. On May 11, Prime Minister Modi urged Indians to avoid purchasing gold for at least a year, stating that amid a global crisis, gold purchases would further strain the country's foreign exchange reserves.
AI-Enabled Cyberattacks: A Serious Threat
The RBI highlighted that AI-enabled cyberattacks represent the most significant short-term risk to the financial system. The report stressed that while India's financial stability risks remain under control despite global uncertainty, frequent external shocks could tighten financial conditions, impact the macroeconomic outlook, and directly affect domestic financial stability.
Economic Outlook and Growth
Despite external challenges, the RBI reported that data indicated steady growth in the first quarter of FY27. The report stated that while an interim US-Iran peace agreement could boost the economy, high oil prices could impact India's growth in FY27. Strong capital inflows, according to the central bank, could reduce funding strains spurred by a larger current account deficit. Funding continues to be a major obstacle despite the resilience of the banking sector.
Banking Sector Stress Tests
The report noted that the assessment is set against a global context of geopolitical uncertainty, tighter financial conditions, and recurrent shocks. According to the RBI, stress on the domestic financial sector remains comparatively mild relative to other crises. Bank stress tests indicate that under the baseline scenario, scheduled commercial banks' gross non-performing asset (NPA) ratio might reach 1.9% by March 2028. However, if macroeconomic conditions worsen, banks' gross NPA ratio could increase to 3.8–4.1% by March 2028.
Non-Banking Financial Companies (NBFCs) Under Stress
The report also highlighted stress areas in the non-bank financial industry. Under the baseline scenario, the RBI's stress test for NBFCs predicted gross NPAs at 2.8% by March 2027. The aggregate capital ratio of NBFCs was predicted to be 20.8% by March 2027 under the baseline scenario. According to the RBI, 15 NBFCs might not meet capital standards under a severe credit stress test.
Mutual Fund Liquidity Violations
In certain areas of the mutual fund business, the central bank reported liquidity violations. According to the report, some mutual funds in debt schemes fell short of minimal liquidity standards in March, but the violations were promptly fixed.
