The Reserve Bank of India said in its Financial Stability Report that the Indian banking system and non-banking finance companies are in fine fettle as they are likely to meet the capital norms even in the most severe stress case. Macro stress tests show that banks are capable of absorbing macroeconomic shocks without further capital infusion by stakeholders and would be able to comply with minimum capital adequacy norms even in a severe stress scenario, even though some segments as well as non-banking financial companies may be vulnerable to liquidity disruptions. The Indian banking system is well positioned to support economic growth with bank credit growing in double digits after a long hiatus, as well as well capitalised, according to the regulators. The Indian economy and domestic financial system remain strong and resilient in a hostile international environment, supported by robust domestic macroeconomic fundamentals, RBI said. The financial markets are witnessing heightened volatility because of global spillovers. Preserving macroeconomic and financial stability on a durable basis is a key to reviving India's long term growth prospects and development aspirations, including its emerging role in the global economy, RBI said. In March 2022, the gross non-performing assets GNPA ratio fell to a six-year low of 5.9% from 7.4% a year ago, but the asset quality of banks improved steadily through the year. The sectoral net NPA ratio fell by 70 bps during the 2021 -- 22 period to 1.7% at the end of the year. The collective provisioning coverage ratio went up to 70.9% in March 2022 from 67.6% a year ago. Their gross NPA ratio could increase to 5.3% by March 2023, due to higher expected bank credit growth. If the situation is severe or medium stress - scenario, the ratio may rise to 6.2% and 8.3% respectively. The banking stability indicator, which presents changes in underlying conditions and risk factors that have a bearing on the stability of the banking sector, showed improvement in soundness, efficiency and market risk dimensions in the second half of FY 22. In FY 22 the aggregate deposits and credit rose by 32.7% and 23.1% despite the fact that the asset quality and profitability indicators remained the same throughout the 2021 -- 22 universe of small finance banks. Aggregate credit extended by NBFCs stood at 28.5 lakh crore in March 2022. The capital adequacy ratio of the NBFC sector may fall by 82 bps to 23.51% under the high-risk shock, with the possibility of 15 NBFCs seeking CRAR falling below the minimum regulatory requirements.