FSR presents the Sub-Committee of the Financial Stability and Development Council’s (FSDC) assessment of the strength of India’s financial system and risks to its stability.
- The FSDC, established in 2010, is chaired by Finance Minister and includes heads of regulators like RBI, SEBI, PFRDA, and IRDA.
- It is responsible for ensuring financial stability and coordination among regulators.
Key highlights of the report
- India still driver of Global Growth
- Resilience of the Indian Economy: India’s real GDP is projected to grow at 6.5% in 2025–26, driven by strong domestic demand which shields economy from global shock).
- Strong Financial Institutions: E.g., the gross non-performing asset ratio (GNPA) ratio and Net NPA (NNPA) of the SCBs declining to multi-decadal lows of 2.3% and 0.5% respectively
- Till 2025, the capital to risk weighted assets ratio (CRAR) of SCBs increased to a record high of 17.3%.
- Strong corporate sector performance: The large borrower cohort’s GNPA ratio declined from 3.8 per cent in September 2023 to 1.9% in March 2025
- Inflation Trends
- Domestic inflation: CPI inflation dropped to a six-year low of 2.8% in May 2025.
- Imported Inflation: Slower global growth may ease commodity and oil prices, though tensions in the Middle East add some uncertainty.
- Global Macrofinancial Risks
- Emerging markets face rising risks from global trade tensions, ongoing geopolitical conflicts, rising Global public debt and spillovers from advanced economies.
- Uncertainty over U.S. trade and economic policies has led to market volatility, tighter financial conditions.
- Climate-related shocks have the potential to disrupt business operations through the materialisation of physical hazards,
Elevated economic and trade policy uncertainties are testing the resilience of the global economy and the financial system
Key Regulatory Initiatives in the Financial Sector
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