Reserve Bank of India (RBI) Releases Financial Stability Report June 2026, Gross NPAs at Multi-Decadal Low of 1.8%

Key facts

• The Reserve Bank of India (RBI) released the June 2026 Financial Stability Report (FSR) on June 30, 2026, stating the financial system is resilient and well capitalised.
• Gross non-performing assets (NPAs) of scheduled commercial banks fell to a multi-decadal low of 1.8% as of March 2026.
• RBI's baseline scenario projects gross NPAs to edge up to 1.9% by March 2028.
• Household sector debt rose to 45.5% of GDP, driven by non-housing retail loans which now account for 58.4% of total household borrowing.
• AI-enabled cyberattacks were ranked as the top risk by surveyed banks and NBFCs for the next 12 months.
• Banks' funding costs are shifting as savers move from low-cost current and savings accounts (CASA) to higher-yielding options like equities and mutual funds.
• Macro stress tests show the banking system well positioned to absorb shocks, with aggregate capital ratios staying above regulatory thresholds even under adverse scenarios.
• RBI flagged rising foreign currency borrowing by NBFCs as raising exchange rate vulnerability, despite most exposure being hedged.
• Bond markets are under strain due to higher supply of government securities and softer demand from insurers and pension funds, keeping long-term yields elevated.
• The near-term risk balance has improved, credited to an interim peace deal in the West Asia conflict and recent government and RBI measures to strengthen capital inflows.