The Reserve Bank of India (RBI) has asked banks to closely assess their individual exposures, especially to firms with concentrated reliance on US-bound exports, according to people familiar with the matter. Early feedback suggests that while sectoral pain is inevitable, banking sector stability is unlikely to be seriously dented.
Banks Exposure To Tariff-Hit Sectors
Data from the RBI as of June 27, 2025, shows that Indian banks collectively have sizeable exposures to tariff-sensitive industries:
| Sector | Exposure (₹ Crore) |
| Textile | 2.77 Lakh |
| Gems & Jewellery | 88,818 |
| Food Processing | 2.23 Lakh |
| Chemicals & Products | 2.71 Lakh |
These industries form the backbone of India’s labour-intensive exports. Together, they account for a large chunk of the country’s shipments to the US, but those actually impacted by higher tariffs from the US will be a smaller subset of this overall exposure.While bankers CNBC-TV18 reached out to did not disclose the exact exposure they had to export-oriented borrowers at risk, they stressed that these exposures are spread across a wide range of companies, many of which have diversified customer bases.
“Preliminary assessment of our book doesn’t indicate major issues,” said a senior executive at a state-owned bank, adding that the bank was in the process of conducting the impact assessment.
Another senior executive at a large public sector bank added that they had conducted the impact assessment, but did not divulge further details on exposure.
The Reserve Bank of India’s (RBI) June 2025 Financial Stability Report, interestingly, published a Systemic Risk Survey (SRS) conducted in May 2025, before Washington announced its 50% tariff hike, which reveals that market participants and economists were already wary of protectionist policies, but saw the overall impact contained.
A summary of feedback from 50 respondents to this May 2025 RBI on the impact of trade tensions and protectionist policies showed that about three-fourths of the respondents assessed moderate impact of such disruptions on overall financial stability.However, around 88% of participants expected trade slowdown to have a limited to moderate impact on banking sector asset quality. While only 4.2% of experts foresaw a significant deterioration in bank asset quality, about 40% expected a moderate rise in non-performing assets (NPAs) in tariff-exposed sectors.
Most of the respondents (around 80%) perceived export-dependent manufacturing sectors (e.g. textiles, readymade garments, electronics) and MSMEs in export clusters to face the highest risk due to global trade disruptions. Nearly 40% of respondents assessed the shipping and logistics industry to be the most vulnerable to trade slowdown.
Economists caution that the impact may not be immediate but could build over the next two quarters as exporters adjust to the new tariff regime.
For now, the RBI’s baseline remains that tariffs will pose manageable, sector-specific challenges, not a systemic banking shock.
Speaking at the FICCI-IBA annual banking conclave in Mumbai earlier this week, the Reserve Bank of India Governor Sanjay Malhotra had said the central bank is ready to step in with policy measures to support economic growth and sectors hit by the higher US tariffs if they start to weigh on India’s economic growth.
“Whatever support is required from us for the growth of the economy and including those of the sectors which are impacted more, if it so happens, we would not be found wanting in our job,” Governor Malhotra said.
He said the RBI has ensured ample liquidity in the banking system and will take all necessary steps to support economic growth, especially in sectors that may be more severely impacted.
The Nifty Bank index has declined another 650 points on Thursday, taking the overall fall over the last four trading sessions to 2,000 points.
