Indian Economy likely to Maintain Strong Growth, Says RBI Report

The Indian economy is likely to maintain strong growth, underpinned by robust domestic demand, benign inflation, and prudent macroeconomic policies despite an uncertain and challenging global economic backdrop, the Reserve Bank said in a report on Wednesday.

The health of commercial banks (SCBs) remains sound with strong capital and liquidity buffers, improved asset quality and robust profitability, the Reserve Bank said in its Financial Stability Report (FSR).

The report reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system and risks to financial stability.

"The domestic financial system remains robust and resilient, bolstered by strong balance sheets, easy financial conditions, and low financial market volatility. Nonetheless, there are near-term risks from external uncertainties - geopolitical and trade-related," it said.

Macro stress test results affirm the resilience of scheduled commercial banks to withstand losses under hypothetical adverse scenarios and maintain capital buffers well above the regulatory minimum. It also confirmed the resilience of mutual funds and clearing corporations, the apex bank added.

Also, non-banking financial companies (NBFCs) remain robust, supported by strong capital buffers, solid earnings, and improving asset quality, the report said.

On insurance, the RBI report said the sector continues to display balance sheet resilience, while the consolidated solvency ratio remained above the minimum threshold limit.