India's Financial Sector Enters 2025 with Strong Momentum

According to RBI Governor Sanjay Malhotra, India's financial sector is set to enter 2025 on a solid foundation, supported by strong earnings, low levels of impaired assets, and robust capital buffers. In his inaugural communication within the RBI's financial stability report, Malhotra highlighted the resilience of India's financial system amidst global uncertainties, including geopolitical conflicts, market volatility, and climate risks.

Malhotra expressed optimism about the Indian economy's prospects, anticipating an improvement after a slowdown in the first half of 2024-25. He noted that consumer and business confidence for the upcoming year remains high, with a brighter investment scenario as corporations approach 2025 with strong balance sheets and high profitability. "Stress test results indicate that the banking system and NBFCs will remain well-capitalised, even under adverse stress scenarios," Malhotra added.