One of the important lessons from the crisis in the last decade relates to the realignment of the policies in explicit pursuit of macroeconomic and financial stability. Macro-prudential regulation with the larger objective of enhancing the resilience of financial system, calls for a comprehensive understanding of the interplay between macroeconomic factors to counter the buildup of imbalances within the financial system. This paper is an attempt to investigate into the relationship between financial stability and a set of macroeconomic determinants pertaining to a full business cycle in India. We have analyzed the macroeconomic determinants of financial stability from two perspectives, i.e., banking stability in terms of NPA ratio and financial stability in terms of credit extension. Our results show that the key determinants of banking and financial stability are rate of growth in credit, rate of growth in stock-market index and short-term interest rates apart from select sectoral GDP growth rates.