|
Reserve Bank released the June 2026 edition of the Financial Stability Report (FSR) today. It noted that despite repeated shocks, the global financial system has thus far demonstrated notable resilience, with markets remaining orderly after an initial bout of volatility following the outbreak of the West Asia conflict. Nevertheless, global financial stability risks remain elevated. Persistent supply chain uncertainties could tighten financial conditions and revive inflationary pressures. Meanwhile, elevated public debt, bond market fragilities, stretched asset valuations, and leveraged NBFIs remain key vulnerabilities that could amplify future shocks. India's sound macroeconomic fundamentals place it in a stronger position than many of its peers and provide greater resilience to external shocks than in past crisis episodes. The balance of risks has turned favourable, supported by the interim peace deal and recent policy measures by the Government and the Reserve Bank aimed at strengthening capital inflows. Domestic financial system remains resilient underpinned by strong bank and non-bank balance sheets. Scheduled Commercial Banks (SCBs) remain safe and sound, supported by strong capital and liquidity buffers, continued improvement in asset quality, and stable profitability. RBI stated that macro stress test results indicate that the banking system remains well-positioned to absorb potential shocks, with aggregate capital ratios projected to remain comfortably above regulatory thresholds even under hypothetical adverse scenarios. Non-banking financial companies (NBFCs) remain financially sound, supported by strong capitalisation, healthy profitability, and improving asset quality. The insurance sector continues to display balance sheet resilience with the solvency ratio of life insurers remaining above the minimum threshold. Powered by Capital Market - Live News
|