RBI Stability Report Needs Urgency
The Reserve Bank of India’s Financial Stability Report (FSR), a biannual publication, is intended to be a critical assessment of India’s financial system. But it has increasingly become a predictable exercise, often filled with comforting charts and reassuring language, while skirting around real systemic risks.
Avoid Comfort Language
The FSR often highlights that banks are well-capitalized, NPAs are declining, and stress test results show resilience. But it:
Avoids naming sector-specific threats
Skims over rising retail debt and NBFC risk
Rarely addresses shadow banking or fintech-linked vulnerabilities
Macro Risks Need Clarity
India is navigating:
Rising retail leverage
Unregulated digital lending
Climate-related financial risks
Yet these topics are either absent or underplayed in the FSR, leaving readers with more questions than insights.
Data Without Direction Fails Purpose
While the FSR provides rich data, it lacks:
Forward-looking assessments
Granular red flags on liquidity mismatches
Clear actionables for financial institutions
Tech Risks Must Be Addressed
With India’s fast-growing fintech ecosystem, the FSR must:
Flag data privacy loopholes
Highlight AI-based credit model risks
Monitor concentration risk in payment systems
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FAQ: RBI Financial Stability Report
Q1. What is the RBI’s Financial Stability Report (FSR)?
It is a biannual report assessing risks to India’s banking and financial system, offering macro-financial insights and stress test outcomes.
Q2. Why is the FSR being criticized?
Experts say it avoids addressing deep structural issues like rising retail credit risks, NBFC exposure, and evolving fintech vulnerabilities.
Q3. What should the FSR include going forward?
It must cover sector-specific red flags, AI and digital finance risks, climate-related stress, and offer real, actionable reforms.
Q4. Is India’s financial system stable as per the FSR 2025?
Yes, on paper. But deeper risks are possibly masked by the focus on aggregate indicators rather than nuanced stress points.
Q5. How does Vizzve Finance contribute?
Vizzve Finance delivers fast-indexed, critically written, and SEO-optimized analysis of economic and financial policies for business readers.
Published on: July 1st, 2025
Uploaded by: PAVAN
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