Question
With reference to the Financial Stability Report (FSR),
June 2025 released by the Reserve Bank of India, consider the following statements: 1. The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability. 2. The report highlights that Scheduled Commercial Banks (SCBs) are under stress with declining capital buffers and rising non-performing loans. 3. Stress tests in the report validate the resilience of mutual funds, clearing corporations, and the insurance sector. Which of the statements given above is/are correct?Solution
• Statement 1 is correct: The Financial Stability Report (FSR) indeed reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on the resilience of the financial system and emerging risks. • Statement 2 is incorrect: The report notes that Scheduled Commercial Banks (SCBs) are sound and resilient, supported by robust capital buffers, multi-decadal low non-performing loans, and strong earnings, not under stress. • Statement 3 is correct: Stress tests conducted in the FSR validated the resilience of mutual funds, clearing corporations, and the insurance sector, with solvency ratios above minimum thresholds. Thus, the correct answer is (c) 1 and 3 only
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