India’s financial system remains strong despite repeated global shocks, according to the Reserve Bank of India’s Financial Stability Report (June 2026). While the global financial system has stayed resilient after the initial volatility caused by the West Asia conflict, the RBI warned that risks to global financial stability remain elevated.
The central bank said ongoing supply chain disruptions could tighten financial conditions and push inflation higher again. It also highlighted rising public debt, fragile bond markets, expensive asset valuations, and highly leveraged non-bank financial institutions (NBFIs) as major global risks that could worsen future shocks.
For India, the RBI said strong macroeconomic fundamentals have put the economy in a better position than many other countries, making it more resilient to external shocks than during previous crises. The report added that the overall balance of risks has improved, helped by the interim peace deal and recent policy measures by the Government and the RBI to support capital inflows.
The RBI said India’s domestic financial system remains resilient, with both banks and non-bank lenders maintaining healthy balance sheets. Scheduled Commercial Banks (SCBs) continue to remain financially strong, supported by robust capital and liquidity buffers, better asset quality, and stable profitability.
According to the report’s macro stress tests, the banking system is well equipped to withstand severe hypothetical shocks. Even under adverse scenarios, banks’ aggregate capital ratios are projected to remain comfortably above the minimum regulatory requirements.
The report also said Non-Banking Financial Companies (NBFCs) remain financially healthy due to strong capital levels, steady profitability, and improving asset quality. Meanwhile, the insurance sector continues to show resilience, with the solvency ratio of life insurers remaining above the prescribed minimum regulatory threshold.
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