India, Jan. 2 -- Gross non-performing assets (NPAs) as a share of total advances of all scheduled commercial banks (SCBs) stood at 2.2% of all advances in September 2025, according to the latest Financial Stability Report (FSR) released by the RBI on December 31. Anybody reading this number on a one-off basis would need to be reminded that this number was 11.2% in 2017-18. The cleaning of bank balance sheets is one of the most important detox exercises for the Indian economy in the last decade. While the number officially reached a peak in 2017-18, there is good reason to believe that the stress had built up from much earlier and came to the fore after the then RBI leadership forced an asset quality review on the banks. Not all of the bad loans were cleaned via recoveries. A large amount has been written off, part of which has required capital infusion into banks from the public exchequer. That India's banks are now in a healthy shape means that the economy is well-placed to see an investment revival once animal spirits are adequately rekindled. With a big boost to consumption demand via tax cuts in last year's budget and the government pressing on the gas as far as the reform paddle is concerned in the more recent past and going forward, there is good reason to be hopeful on this front. To be sure, not everything is bright and promising on the financial sector front. The FSR rightly flags the growing turbulence behind an exuberance on the surface as far as global economic, especially financial conditions are concerned. Bursting of an AI bubble, a sudden global liquidity shock etc. are some such downside risks which have been flagged in the FSR. The larger message from the FSR merits careful attention. India's domestic financial sector is perhaps more resilient than it has been in the last decade. This rejuvenation of banking sector health has been built in an environment of relatively tepid investment and credit appetite. A sustained growth push would need this appetite to increase going forward. But any such trajectory would have to be mindful of the fact that global economic conditions could become extremely turbulent. What the economy, especially its financial sector strategy, needs is a calibrated slingshot approach aimed at pushing growth but pragmatically mindful of the external risks involved....