**Executive Summary**
The Reserve Bank of India (RBI) released the December 2025 edition of the Financial Stability Report (FSR) on December 31, 2025. The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system and its associated risks.
**Key Points / Main Content**
*Global Economy and Markets:*
* The global economy is resilient but faces downside risks due to uncertainty, high public debt, and potential market correction.
* Global financial markets appear strong on the surface but show growing underlying vulnerabilities, including rising risk assets, expanding non-bank financial intermediaries, interconnectedness with banks, and the growth of stablecoins.
*Indian Economy:*
* The Indian economy continues to grow strongly, underpinned by robust domestic demand, benign inflation, and prudent macroeconomic policies.
* The domestic financial system is robust and resilient, supported by strong balance sheets, easy financial conditions, and low financial market volatility. Near-term risks include geopolitical and trade-related external uncertainties.
*Financial Institutions:*
* Scheduled commercial banks (SCBs) maintain sound health with strong capital and liquidity buffers, improved asset quality, and robust profitability. Macro stress tests confirm their resilience.
* Macro stress tests also confirm the resilience of mutual funds and clearing corporations.
* Non-banking financial companies (NBFCs) remain robust with strong capital buffers, solid earnings, and improving asset quality.
* The insurance sector continues to display balance sheet resilience and maintains a consolidated solvency ratio above the minimum threshold.
**Impact Analysis**
**Scheduled Commercial Banks (SCBs)**
*Impact:* Confirms their strong financial health and ability to withstand economic stress.
*Action Required:* Maintain strong capital and liquidity buffers; continue to improve asset quality and profitability.
**Non-Banking Financial Companies (NBFCs)**
*Impact:* Highlights their robust financial state.
*Action Required:* Maintain strong capital buffers, solid earnings, and improving asset quality.
**Insurance Sector**
*Impact:* Highlights the sector's balance sheet resilience.
*Action Required:* Maintain a consolidated solvency ratio above the minimum threshold limit.
**Mutual Funds and Clearing Corporations**
*Impact:* Highlights resilience of these companies.
*Action Required:* Maintain strategies to remain resilient in the face of economic stress.
Key Entities Referenced
Financial Stability Report (FSR): Report released by the Reserve Bank reflecting the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system and risks to financial stability.
Reserve Bank: The issuing entity of the Financial Stability Report.
Financial Stability and Development Council (FSDC): The council under which the Sub-Committee makes an assessment reflected in the Financial Stability Report
Mumbai: Location of the Department of Communication, Central Office of the Reserve Bank of India
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
December 31, 2025
RBI releases the Financial Stability Report, December 2025
Today, the Reserve Bank released the December 2025 edition of the Financial Stability
Report (FSR), which reflects the collective assessment of the Sub-Committee of the
Financial Stability and Development Council (FSDC) on the resilience of the Indian financial
system and risks to financial stability.
Highlights:
• Global economy has been resilient, supported by fiscal measures, front-loaded
trade, and strong AI-related investment. However, downside risks persist due to still
elevated uncertainty, high public debt, and the risk of a disorderly market correction.
• Global financial markets appear strong on the surface but show growing underlying
vulnerabilities. Sharp rise in equities and other risk assets, the expanding role of
non-bank financial intermediaries and their deepening interconnectedness with
banks, and the growth of stablecoins all heighten global financial system fragilities.
• Despite an uncertain and challenging global economic backdrop, the Indian
economy continues to grow strongly, underpinned by robust domestic demand,
benign inflation, and prudent macroeconomic policies.
• The domestic financial system remains robust and resilient, bolstered by strong
balance sheets, easy financial conditions, and low financial market volatility.
Nonetheless, there are near-term risks from external uncertainties - geopolitical and
trade related.
• The health of the scheduled commercial banks (SCBs) remains sound with strong
capital and liquidity buffers, improved asset quality and robust profitability.
• Macro stress test results affirm the resilience of SCBs to withstand losses under
hypothetical adverse scenarios and maintain capital buffers well above the
regulatory minimum. Stress tests also confirm the resilience of mutual funds and
clearing corporations.
• Non-banking financial companies (NBFCs) remain robust supported by strong capital
buffers, solid earnings, and improving asset quality.
• The insurance sector continues to display balance sheet resilience and the
consolidated solvency ratio remained above the minimum threshold limit.
(Brij Raj)
Press Release: 2025-2026/1807 Chief General Manager