The central bank’s June 2026 Financial Stability Report finds banks well-capitalised and stress-tested, even as supply chain uncertainty and stretched global asset valuations keep risks elevated worldwide.
According to the Reserve Bank of India’s Financial Stability Report for June 2026, released on Tuesday, India’s financial system has remained resilient amid a very challenging international environment. The Assessment produced by a committee of the Financial Stability and Development Council concluded that India’s financial system is based on strong Macroeconomic fundamentals, healthy balance sheets of banking and non-banking financial institutions, and supportive Policy Measures.
Global Risks Remain Elevated
The Reserve Bank of India reported that the global financial system has remained relatively stable despite recent opportunities for instability and that it was once again able to restore a degree of order in capital markets from the turmoil created by the outbreak of hostilities in the Middle East. However, it has recently warned that there is still considerable risk to global financial stability with ongoing uncertainty about the supply chain, which is likely to tighten financial conditions and spill over into higher levels of inflation and ongoing dangerously high levels of debt, fragile bond markets, macroeconomic asset classes and leveraged non-banking financial institutions, increasing the likelihood of experiencing substantial financial market shocks.
Why India Is Better Positioned
The RBI has indicated that India’s macroeconomic fundamentals are much stronger than many other jurisdictions’; therefore, India has significantly more resilience to external economic shocks than has historically been the case. The financial stability report indicated that the the relatively resilient financial position and strength of the macroeconomic fundamentals in India, compared to previous periods of global financial difficulties, has created balance of risk where the balance of risk is now more positive, with the establishment of a very temporary cease-fire agreement and implementation of government of India and Reserve Bank of India policies to support the inflow of foreign investment to India.
Banks and NBFCs Show Strength
The scheduled commercial banks are adequately capitalised and possess ample liquidity, while experiencing ongoing improvements in asset quality and consistent profitability. The macro stress testing results indicate that the banking sector will have the capacity to absorb any potential fallout from severe market events. All capital ratios for the banking sector are projected to remain well above the regulatory minimums, even in the most adverse stress scenarios. Based on these factors, the non-banking financial companies also appear financially sound, as evidenced by strong capitalisation and high profits.
