The Reserve Bank of India recently released 26^th edition of its Financial Stability Report (FSR) which reflects the Financial Stability and Development Council (FSDC) sub-committee's collective assessment on the risks to financial stability as well as the financial system's resilience and mention that even as the Indian economy combats strong global headwinds, sound macroeconomic fundamentals as well as healthy financial and non-financial sector balance sheets offer room for cautious optimism. The FSR report offers insights into the health of the Indian banking system.

As per the report, the gross non-performing asset (GNPA) ratio of scheduled commercial banks (SCBs) fell to a seven-year low of five percent and the net non-performing assets (NNPA) dropped to a 10-year low of 1.3 percent. Macro stress tests for credit risk reveal that banks would be able to comply with the minimum capital requirements even under severe stress scenarios.

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