**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 Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system and its risks. The report highlights the stability and resilience of the Indian financial system despite global uncertainties.
**Key Points / Main Content**
* **Global Economic and Financial Landscape:**
* The global economy has shown resilience but is subject to downside risks due to uncertainty, high public debt, and the potential for market correction.
* Global financial markets present underlying vulnerabilities, including the rise in equities, the role of non-bank financial intermediaries, banks' interconnectedness, and the growth of stablecoins, heightening system fragility.
* **Indian Economy:**
* The Indian economy continues to grow strongly, supported by domestic demand, inflation, and macroeconomic policies, despite a challenging global backdrop.
* **Domestic Financial System:**
* The domestic financial system is robust and resilient due to strong balance sheets, conditions, and low market volatility.
* Near-term risks remain due to external uncertainties related to geopolitics and trade.
* **Scheduled Commercial Banks (SCBs):**
* SCBs maintain sound health with strong capital and liquidity buffers, improved asset quality, and profitability.
* Macro stress tests confirm the resilience of SCBs to withstand losses and maintain capital buffers above the regulatory minimum.
* Stress tests confirm the resilience of mutual funds and clearing corporations.
* **Non-Banking Financial Companies (NBFCs):**
* NBFCs remain robust, supported by strong capital buffers, earnings, and improving asset quality.
* **Insurance Sector:**
* The insurance sector shows balance sheet resilience, with the consolidated solvency ratio above the minimum threshold.
**Impact Analysis**
**Stakeholders:**
* **RBI and FSDC:**
**Impact:** The FSR provides a comprehensive assessment, enabling informed policy decisions to maintain financial stability.
**Action Required:** Monitor key indicators and take appropriate regulatory measures.
* **Scheduled Commercial Banks (SCBs):**
**Impact:** SCBs need to maintain strong capital and liquidity buffers.
**Action Required:** Undergo regular stress tests and comply with regulatory requirements.
* **Non-Banking Financial Companies (NBFCs):**
**Impact:** NBFCs need to sustain capital buffers, earnings, and asset quality.
**Action Required:** Manage risks effectively and comply with regulatory guidelines.
* **Insurance Sector:**
**Impact:** The insurance sector needs to maintain balance sheet resilience and the solvency ratio above the minimum threshold.
**Action Required:** Ensure compliance with regulatory solvency requirements.
Key Entities Referenced
Financial Stability Report (FSR): A report 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.
Financial Stability and Development Council (FSDC): Council that assesses the resilience of the Indian financial system and risks to financial stability.
Reserve Bank of India: The central bank of India, which releases the Financial Stability Report.
Mumbai: Location of the Department of Communication 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