India’s economic outlook is set to improve in 2025 despite global challenges, according to RBI Governor Sanjay Malhotra. The Financial Stability Report highlights strong domestic drivers like consumer and business confidence, investment, and robust banking stability, offering optimism after a slowdown in early FY 2024-25.

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• RBI Governor Sanjay Malhotra predicts improved economic prospects in 2025.
• Indian economy slowed in H1 2024-25; GDP growth fell to 6% from 8.2% in H1 2023-24.
• Q2 2024-25 GDP growth dropped to a 7-quarter low of 5.4%.
• Recovery expected in Q3 and Q4 of FY 2024-25, led by public consumption, investments, and strong service exports.
• Stress tests show banking and NBFC sectors’ capital levels remain above regulatory limits even under stress scenarios.
• Gross bad loans in banks expected to rise from 2.6% in September 2024 to 3% by March 2026.
• Improved bank asset quality due to recoveries, write-offs, and controlled bad loans growth.
• Global risks include geopolitical tensions, financial market turmoil, climate events, and rising debt.
• RBI assures no bank will fall below the 9% minimum capital requirement, even under adverse conditions.