India’s financial sector outperforms global peers in 2025 amid geopolitical tensions

New Delhi: India’s financial sector outperformed major global peers with broadly positive outcomes amid geopolitical tensions, tariff wars and supply‑chain disruptions, showcasing resilience and stability, a report said on Tuesday.

Financial services sector recorded mixed year marked by growth, regulatory shifts, and sustained digitisation efforts across the ecosystem, said the report from Grant Thornton summarising how the sector fared in CY25.

The financial sector saw accelerated credit growth of around 20 per cent led by NBFCs, with retail loans, MSME financing and specialised credit such as gold and vehicle loans contributing substantially, while banks maintained steady growth in retail and MSME lending.

MFIs and smaller NBFCs faced profitability pressures, alongside macroeconomic challenges such as interest rate volatility and inflation, the report added.

Co-operative and urban co-operative banks continued to confront governance, technology, and compliance gaps.

Capital markets remained active with increased investment activity, while insurance sector reforms progressed, enabling wider coverage and industry expansion.

On the macro front Reserve Bank of India upgraded India’s GDP growth to 6.8 per cent and inflation eased to its lowest level in a decade, enabling monetary easing and supporting credit growth and consumption.

Despite tax cuts and GST rate rationalisation, India remained on track to meet its fiscal deficit target, supported by record RBI dividends and ongoing disinvestment.

The RBI maintained a neutral monetary policy stance and kept the repo rate at 5.50 per cent, amid confidence that headline inflation will remain within or close to its target band for FY26.

The government’s continued focus on strengthening Digital Public Infrastructure was evident from expanding the Unified Lending Interface, advancing a central bank‑backed digital currency framework, accelerating Account Aggregator adoption and scaling the Open Network for Digital Commerce to integrate MSMEs, NBFCs and banks into interoperable digital marketplaces.

The regulators focused on simplifying the processes while enforcing a stricter compliance and governance frameworks to promote sustainable and scalable growth in the sector.

IANS