India's scheduled commercial banks have significantly improved their financial health, with Gross Non-Performing Assets (NPAs) dropping to 2.2% by September 2025 from a peak of 11.2% in 2017-18. This 'detox' exercise, involving write-offs and capital infusions, positions the economy for potential investment revival. While domestic financial sector resilience is noted, the RBI's Financial Stability Report also warns of global turbulence and potential downside risks like an AI bubble burst or liquidity shocks.