Overview
- Macro stress tests on 46 banks project capital adequacy easing to 16.8% by March 2027 in the baseline and to 14.5–14.1% under adverse cases, with none breaching the 9% minimum and four dipping into capital conservation buffers without fresh capital.
- Liquidity assessments show the aggregate Liquidity Coverage Ratio falling from 131% to 116.8% under severe stress, with three banks slipping below the 100% threshold.
- Tests on 174 NBFCs indicate CRAR declining from 22.8% to 21.7% in the baseline and to 20.9% under severe credit stress, with gross NPAs potentially rising to 5.4% and 11 entities breaching the 15% CRAR requirement in the worst case.
- The RBI highlights rising interconnectedness from private credit and complex circular financing linked to AI-related lending as transmission channels for financial stress.
- Household debt has increased to 41.3% of GDP as of March 2025, led by consumption loans, while external risks such as geopolitical and trade tensions and a potential sharp US equities correction could tighten domestic financial conditions.