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Informist, Tuesday, Jun. 30, 2026

 

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--RBI report:India fincl stability risks contained despite global uncertainty 
--RBI report: Domestic banking system continues to support economic activity 
--RBI report: Recurring external shocks can tighten fincl conditions 
--RBI report: Recurring external shocks can impact macroecon outlook 
--RBI report: Recurring external shocks can impact domestic fincl stability 
--RBI report: India's macroecon fundamentals buffer against external shocks 
--RBI report: Indian econ remains exposed to energy price shocks 
--RBI report: Indian econ remains exposed to supply-chain disruptions 
--RBI report: Domestic fincl system stress relatively low vs previous crises 
--RBI report: Data suggests India growth stayed firm Q1 despite headwinds 
--RBI report: High oil prices can affect India's growth in FY27 
--RBI report: Interim US-Iran peace deal can give tailwinds to India growth 
--RBI report: Strong capital inflows can mitigate wider CAD-led funding issue 
--RBI report: Despite banking system's resilience, funding a key challenge 

 

NEW DELHI – India's financial system and the economy remain resilient despite global uncertainty but recurring global shocks, such as the war in West Asia, can tighten financial conditions and potentially impact macroeconomic outlook and financial stability, the Reserve Bank of India said Tuesday.

 

"India's sound macroeconomic fundamentals provide ample buffers to deal with external shocks," the RBI said in the half-yearly Financial Stability Report. "However, the Indian economy remains exposed to energy price shocks and supply-chain disruptions given its high dependence on imported oil and other key commodities."

 

India's economy grew 7.7% in 2025-26 (Apr-Mar) and the central bank projects it to grow 6.6% in FY27.

 

 

The war in West Asia and the closure of the Strait of Hormuz impacted India by raising energy prices and choking supplies. The war also put the rupee under pressure against the dollar while government bond yields rose. However, the pressure on exchange rate and bond yields eased after the government and the RBI earlier this month took measures to attract capital flows, helping overall financial conditions to ease, the RBI said.

 

"Notably, sound macroeconomic fundamentals and a healthy financial system helped the Indian economy to withstand spillovers from the West Asia crisis," the RBI said. "The balance sheet of banks and non-banks remain robust with adequate capital and liquidity buffers, limiting the risk of financial shocks spilling over to the real economy."

 

Despite an uptick in the financial system stress indicator, the stress in the domestic financial system remains relatively low compared with previous crisis episodes, the RBI said. 

 

According to the central bank, most high-frequency indicators for Apr–May point to continued resilience in economic activity, suggesting that growth has remained firm in the first quarter of FY27 despite headwinds arising from the West Asia conflict. However, high oil and other commodity prices, and weaker global growth could adversely affect India's domestic growth this financial year, the RBI said.

 

"Several measures undertaken by the Government, including support to MSME and export sectors, are expected to help sustain economic activity, while mitigating the impact of external shocks," the RBI said in the half-yearly report. "In addition, the interim peace deal has laid the foundation for cessation of this conflict and normalisation of supply chains, which could provide tailwinds to growth."

 

Domestic financial system, as the RBI, remains resilient underpinned by strong bank and non-bank balance sheets. Scheduled commercial banks remain safe and sound, supported by strong capital and liquidity buffers, continued improvement in asset quality, and stable profitability, the central bank added.

 

"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," the central bank said.

 

These recent measures, such as removal of capital gains and withholding taxes on government bonds and the scheme to bring in deposits by non-resident Indians, are expected to bolster capital inflows, the RBI said. Even if the current account deficit widens this year, stronger capital inflows are likely to mitigate the funding constrain, the RBI said.

 

"Even as the banking system's resilience remains intact, funding is emerging as a key challenge," the central bank said. "The recent measures to boost capital flows, however, are expected to ease funding pressures on banks by improving their access to less-costly Rupee liquidity."  End

 

US$1 = INR 94.66

 

Reported by Shubham Rana

Edited by Akul Nishant Akhoury

 

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