A man walks past a sign of the Reserve Bank of India in Mumbai, India on Aug 5, 2022. (INDRANIL MUKHERJEE / AFP)

NEW DELHI – The Indian economy presents a picture of resilience amid global shocks and challenges, as the country's financial stability has been maintained and domestic financial markets have remained "stable and fully functional", the central bank has said.

The cumulative impact of the extraordinary shocks to the entire world over the last three years "is still working its way" across countries, Governor of Reserve Bank of India Shaktikanta Das said on Thursday in a report.

He said that while the international economic order stands challenged and financial markets are in turmoil due to monetary tightening in most parts of the world, India's banking system is "sound and well-capitalized".

The non-banking financial sector has also withstood these challenges. Stress test results indicate that banks would be able to withstand even severe stress conditions, should they materialize, Governor of Reserve Bank of India Shaktikanta Das said

The non-banking financial sector has also withstood these challenges. Stress test results indicate that banks would be able to withstand even severe stress conditions, should they materialize, Das said.

"Furthermore, in spite of formidable global headwinds, India's external accounts remain well-cushioned and viable. Going forward, core issues of management of climate change, dealing with unanticipated and fresh shocks, if any, further strengthening the buffers of our financial system, harnessing fintech innovations and deepening financial inclusion will continue to receive priority attention from regulators and policy makers," he said.

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"We recognize the destabilizing potential of global risks, even as we draw strength from the robust macroeconomic fundamentals of the Indian economy," he said.

On the issue of inflation, the report said that consumer price index inflation has moderated after remaining above the upper tolerance band of the inflation target range since January 2022.

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Notably, the country's retail inflation in November fell to 5.88 percent from 6.77 percent in October, the lowest in the past 11 months.

In a bid to ease inflation, the central bank has been continuously hiking repo rate this year.