The Reserve Bank of India (RBI) has warned that rising public debt, high asset prices, and global tensions could lead to new financial market shocks. This message was shared in the RBI’s latest Financial Stability Report, released on June 30, 2025.
According to the report, India’s financial markets—especially the government bond market—are showing signs of increased volatility. This is mainly due to changing economic policies and rising geopolitical tensions. The RBI said that current problems like high public debt and expensive asset prices could make the situation worse if any shock occurs.
As per government data, India’s public debt is expected to rise to ₹196.78 lakh crore by March 2026. This is up from ₹181.74 lakh crore expected at the end of March 2025.
The RBI also raised concerns about too much risk-taking by Non-Banking Financial Companies (NBFCs). This, they say, could add to financial instability.
The report further explains that countries are making different choices to balance inflation and growth. Because of this, policies in different parts of the world are moving in different directions. India also faces pressure from global trade troubles, rising political conflicts, and the effects of economic decisions made in richer countries.
Despite these issues, the RBI says the Indian economy is doing well. It is growing steadily and inflation is slowing down. These factors are helping keep the economy and financial system stable.
The report also noted that India is prepared to handle shocks from changes in global trade tariffs. But it warned that global risks and rising political tensions still remain a concern.
To deal with these problems, the RBI is working on new rules and reforms. These focus on fighting financial fraud, improving online lending, protecting investors, and keeping enough money flowing through the system.
In short, while the Indian economy is strong, the RBI is keeping a close watch on risks that could affect markets in the coming months.
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