While India’s economy continues to grow strongly and the domestic financial system remains sound, both face near-term risks from external uncertainties from further escalation in geopolitical and trade tensions and widening geo-economic fragmentation, according to the latest Financial Stability Report (FSR).

In his foreword to the half-yearly FSR, to which all financial sector regulators have contributed, RBI Governor Sanjay Malhotra highlighted that despite a volatile and unfavourable external environment, the economy is projected to register high growth, driven by strong domestic consumption and investment.

The Governor noted that the economy and the financial system remain robust and resilient supported by strong growth, benign inflation, healthy balance-sheets of financial and non-financial firms, sizeable buffers and prudent policy reforms.