Strong macroeconomic fundamentals offer India a “reasonable degree of resilience” to fight uncertainties, but poor asset quality of banks and managing expectations are key challenges for regulators and the government, says the Financial Stability Report. There has been a significant improvement in the macroeconomic environment, and going forward, economic performance is expected to be better, the six-monthly FSR released by the Reserve Bank. However, managing expectations is a challenge for policymakers as the recovery in business sentiment has not taken roots, the report has warned. A relatively stronger macro-economic fundamentals in terms of growth, inflation, and current account and fiscal deficits provide a reasonable degree of resilience to our financial system, it said. Gross non-performing assets (NPAs) in the banking system have grown to 4.6 per cent at the end of March this year from 4.5 per cent in September 2014, while the stressed advances including standard restructured loans have risen to 11.1 per cent from 10.7 per cent, the report said.