**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 risks to financial stability. The report highlights the resilience of the global and domestic economies, despite underlying vulnerabilities and external risks.
**Key Points / Main Content**
*Global Economic and Financial Market Overview*
- The global economy has been resilient but faces downside risks due to uncertainty, high public debt, and market correction risks.
- Global financial markets appear strong but show growing vulnerabilities, including rising equities, non-bank intermediaries, and stablecoins.
*Indian Economy*
- The Indian economy continues to grow strongly, supported by domestic demand, benign inflation, and macroeconomic policies.
- The domestic financial system remains robust, with strong balance sheets and easy financial conditions, despite geopolitical and trade-related risks.
*Financial Institutions*
- Scheduled commercial banks (SCBs) maintain sound health with strong capital, liquidity buffers, improved asset quality, and profitability.
- Macro stress tests confirm the resilience of SCBs, mutual funds, and clearing corporations.
- Non-banking financial companies (NBFCs) remain robust due to strong capital buffers, earnings, and asset quality.
- The insurance sector displays balance sheet resilience, and solvency ratio is above the minimum threshold.
**Impact Analysis**
**Scheduled Commercial Banks (SCBs)**
*Impact*
- Banks are confirmed to be resilient under adverse scenarios and are maintaining capital buffers.
*Action Required*
- Banks must continue to maintain robust capital and liquidity buffers.
**Non-Banking Financial Companies (NBFCs)**
*Impact*
- The report highlights that NBFCs remain robust.
*Action Required*
- Continue to maintain strong capital buffers, earnings, and asset quality.
**Insurance Sector**
*Impact*
- The sector's balance sheet resilience is noted.
*Action Required*
- Continue to maintain the consolidated solvency ratio above the minimum threshold limit.
**Mutual Funds and Clearing Corporations**
*Impact*
- The entities are resilient
*Action Required*
- Continue to withstand stress tests.
Key Entities Referenced
Financial Stability Report (FSR): A report released by the Reserve Bank of India, reflecting the 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.
Financial Stability and Development Council (FSDC): The Council whose sub-committee provides collective assessment on the resilience of the Indian financial system.
Reserve Bank of India: The central bank of India, responsible for releasing the Financial Stability Report.
Scheduled Commercial Banks (SCBs): Banks whose health and resilience is discussed in the report.
Non-banking financial companies (NBFCs): Financial companies whose resilience is discussed in the report.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
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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