Financial Stability Report

News: The Financial Stability Report, December 2024 has highlighted that Indian economy, and financial system remains robust amid global vulnerabilities. Financial Stability Report

Key findings of the Financial Stability Report 

• Prospects of Economic Growth: The Gross Domestic Product (GDP) is expected to grow at 6.6% in FY25 (2024-25), given the revival in rural consumption, increased government spending and services exports. 
• Fiscal Discipline: The union government’s debt to GDP ratio is expected to decline from 62.7% (2020-21) to 58.6% by 2024-25. 
  • States’ outstanding liabilities are also expected to decline from 31% to 28.8% during the same period. 
• Resilient Financial System:  
  • Scheduled Commercial Banks (SCBs)  
    • They display strong profitability, lower non-performing assets and adequate capital and liquidity buffers. 
    • Return on assets and return on equity are at a decadal high. 
    • The Gross Non-Performing Assets (GNPA) Ratio has fallen to a multi-year low. 
    • Even under adverse scenario, SCBs aggregate capital would remain much higher than the minimum regulatory capital requirement of 9% in March 2026. 
  • Non-Banking Financial Companies 
    • They are financially healthy with sizable capital buffers, robust interest margins and improved asset quality. 
    • Their Capital to Risk-Weighted Assets Ratio (CRAR) is expected to remain much above the regulatory minimum level of 15% even under a high-risk scenario. 
• Retail Inflation: It has come down to 5.5% in November 2024, largely due to softening of food prices and favorable base effect.