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The fundamentals of the Indian economy, according to the RBI, are sound and resilient and it is confronting strong global headwinds. These are the views of the central bank's Financial Stability Report, which expressed optimism over economic growth.

"The global economy is facing formidable headwinds with recessionary risks looming large. The interplay of multiple shocks has resulted in tightened financial conditions and heightened volatility in financial markets.

"The Indian economy is confronting strong global headwinds. Yet, sound macroeconomic fundamentals and healthy financial and non-financial sector balance sheets are providing strength and resilience and engendering financial system stability," the RBI noted.

It said that buoyant demand for bank credit and early signs of a revival in the investment cycle are benefiting from improved asset quality, return to profitability and strong capital and liquidity buffers of scheduled commercial banks (SCBs).

The gross non-performing asset (GNPA) ratio of scheduled commercial banks fell to a seven-year low of 5.0 per cent and net non-performing assets (NNPA) have dropped to a ten-year low of 1.3 per cent in September 2022, said the report.

The Indian economy presents a picture of resilience and financial stability has been maintained, RBI governor Shaktikanta Das noted in the foreword of the same report.

India's external accounts remain well-cushioned and viable, he noted further, adding that in 2023, India is well positioned to play a leading role in the world stage as part of its G20 presidency.

"The biggest challenge for G20 as a group is to reignite the efficacy of multilateralism," Das pointed out. "On the domestic front, we recognise the destabilising potential of global risks, even as we draw strength from the robust macroeconomic fundamentals of the Indian economy."

He concluded by adding: "The Reserve Bank and the other financial regulators remain vigilant and in readiness to ensure the stability and soundness of our financial system through appropriate interventions, whenever necessary, in the best interest of the Indian economy."