RBI releases the Financial Stability Report, December 2025

**Executive Summary** This press release, dated December 31, 2025, announces the release of the December 2025 edition of the Financial Stability Report (FSR) by the Reserve Bank of India. 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. **Key Points / Main Content** * **Global Economy and Financial Markets:** * The global economy has been resilient, but downside risks persist due to uncertainty, high public debt, and potential market corrections. * Global financial markets show underlying vulnerabilities, including rising equity and risk asset prices, the role of non-bank financial intermediaries and interconnectedness with banks, and the growth of stablecoins. * **Indian Economy:** * The Indian economy continues to grow strongly, supported by domestic demand, benign inflation, and prudent macroeconomic policies, despite an uncertain global backdrop. * The domestic financial system remains robust, with strong balance sheets, easy financial conditions, and low market volatility, although near-term risks from external uncertainties remain. * **Financial Institutions:** * Scheduled commercial banks (SCBs) remain sound with strong capital and liquidity buffers, improved asset quality, and robust profitability. * Macro stress tests confirm the resilience of SCBs to withstand losses and maintain capital buffers, and also confirm 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 shows balance sheet resilience, with the consolidated solvency ratio above the minimum threshold. **Impact Analysis** **Stakeholder: Reserve Bank of India** * **Impact:** Responsible for releasing and overseeing the FSR, assessing financial system stability, and implementing policies to mitigate risks. * **Action Required:** Monitor global and domestic financial conditions, assess the resilience of financial institutions, and take appropriate measures to maintain financial stability. **Stakeholder: Financial Institutions (SCBs, NBFCs, Insurance Companies)** * **Impact:** The report provides an overview of their performance and stability, influencing market perception and regulatory oversight. * **Action Required:** Continue to maintain strong capital and liquidity buffers, manage asset quality, and adhere to regulatory requirements to ensure resilience. **Stakeholder: Financial Stability and Development Council (FSDC)** * **Impact:** The report reflects the collective assessment of the FSDC's Sub-Committee, highlighting the importance of inter-regulatory coordination and information sharing for financial stability. * **Action Required:** Utilize the FSR to guide policy decisions, enhance coordination among regulators, and address systemic risks to the financial system.

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