Financial Stability Report (FSR)

Financial Stability Report (FSR): Recently, the Reserve Bank of India released its biannual Financial Stability Report (FSR), highlighting that India continues to serve as a strong pillar of global economic growth.

• Key Highlights of Report : As of March 2025, the Gross Non-Performing Asset (GNPA) ratio stands at 2.3%, and under a baseline scenario, it is projected to rise to 2.5%.

o For 46 scheduled commercial banks, which together represent 98% of the sector's total assets, the GNPA ratio may increase to 2.6% by March 2027.

o Capital adequacy across the banking sector remains comfortably above the regulatory minimum, ensuring sufficient resilience to absorb adverse shocks.

o India’s growth trajectory is largely driven by domestic demand, and the outlook for food inflation is optimistic, aided by softening prices and record crop production.

o Non-Banking Financial Companies (NBFCs) are also performing well, maintaining strong capital positions, robust profitability, and improving asset quality.

• About FSR : A biannual publication released by the Reserve Bank of India (RBI).

o It reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC).

o The report provides insights into the resilience of the Indian financial system and highlights risks to financial stability.

o The FSR also includes the Systemic Risk Survey (SRS), which gathers expert and market participant views on: Global risks, Financial risks, Macroeconomic risks, Institutional risks and General risks