India’s banking sector has achieved a significant milestone, with gross non-performing assets (NPAs) falling to a multi-decade low of 1.8 per cent as of March 31, 2026, according to the Reserve Bank of India’s latest Financial Stability Report (FSR). The report states that the country’s financial system remains resilient, supported by strong balance sheets across banks and non-banking financial institutions despite ongoing global economic uncertainties.
The RBI noted that India’s sound macroeconomic fundamentals have strengthened its ability to withstand external shocks better than many other economies. While global financial markets have remained largely stable despite geopolitical tensions, the central bank cautioned that rising oil prices and prolonged supply chain disruptions could increase exchange rate volatility in the coming months.
The report also identified artificial intelligence-enabled cyberattacks as the most significant near-term cybersecurity threat facing the Indian banking system. To assess preparedness, the RBI conducted a survey of financial institutions, which found that banks have adopted robust cyber risk management practices, including regular vulnerability assessments and penetration testing of critical information systems.
However, the central bank emphasised that greater attention is needed to improve cybersecurity awareness and employee training, as human error continues to remain a key risk factor. The RBI said strengthening cyber resilience alongside maintaining financial stability will be essential as India’s banking sector continues its digital transformation and adapts to an increasingly complex threat landscape.