New Delhi, Dec 9 (NationPress) India's financial sector has shown remarkable performance, outperforming key global competitors amidst ongoing geopolitical tensions, tariff conflicts, and supply chain challenges, reflecting its resilience and stability, according to a report released on Tuesday.

The financial services industry experienced a mixed year characterized by growth, regulatory transitions, and ongoing digitization efforts throughout the ecosystem, as detailed in the report from Grant Thornton that assesses the sector's performance in CY25.

Notably, the financial sector witnessed a significant surge in credit growth of approximately 20 percent, primarily driven by Non-Banking Financial Companies (NBFCs). The substantial contributions from retail loans, MSME financing, and specialized credit offerings, such as gold and vehicle loans, were instrumental, while banks sustained consistent growth in retail and MSME lending.

Microfinance Institutions (MFIs) and smaller NBFCs encountered profitability challenges amidst macroeconomic pressures like interest rate fluctuations and inflation, as noted in the report.

Co-operative and urban co-operative banks continued to face issues related to governance, technology, and compliance.

Capital markets remained vibrant, with heightened investment activities, while reforms in the insurance sector progressed, fostering broader coverage and industry growth.

On the macroeconomic front, the Reserve Bank of India (RBI) revised India's GDP growth forecast to 6.8 percent, and inflation rates decreased to their lowest level in a decade, facilitating monetary easing and bolstering credit growth and consumer spending.

Despite measures like tax reductions and GST rate adjustments, India remains on track to achieve its fiscal deficit goals, bolstered by record RBI dividends and ongoing disinvestment strategies.

The RBI maintained a neutral monetary policy stance, keeping the repo rate at 5.50 percent, with confidence that headline inflation will stay within or near its target range for FY26.

The government’s unwavering commitment to enhancing Digital Public Infrastructure was evident through initiatives like expanding the Unified Lending Interface, advancing a central bank-backed digital currency framework, speeding up Account Aggregator adoption, and scaling the Open Network for Digital Commerce to link MSMEs, NBFCs, and banks into interoperable digital marketplaces.

Regulators are focused on streamlining processes while enforcing more rigorous compliance and governance frameworks to promote sustainable and scalable growth in the sector.