RBI releases the Financial Stability Report, December 2025

**Executive Summary** This document summarizes the Reserve Bank of India's (RBI) December 2025 edition of the Financial Stability Report (FSR). 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 was released on December 31, 2025. **Key Points / Main Content** *Global Economic and Financial Stability* * The global economy has been resilient, but downside risks remain due to uncertainty, high public debt, and the risk of market correction. * Global financial markets show underlying vulnerabilities despite appearing strong, with concerns about equities, risk assets, non-bank financial intermediaries, interconnectedness with banks, and stablecoins. *Indian Economy* * The Indian economy continues to grow strongly despite global challenges, supported by domestic demand, benign inflation, and prudent macroeconomic policies. *Domestic Financial System* * The domestic financial system remains robust, supported by strong balance sheets, easy financial conditions, and low market volatility, though near-term risks from external uncertainties exist. *Scheduled Commercial Banks (SCBs)* * SCBs' health is sound with strong capital and liquidity buffers, improved asset quality, and robust profitability. * Macro stress tests affirm the resilience of SCBs to withstand losses and maintain capital buffers above regulatory minimums, including the resilience of mutual funds and clearing corporations. *Non-Banking Financial Companies (NBFCs)* * NBFCs remain robust, supported by strong capital buffers, solid earnings, and improving asset quality. *Insurance Sector* * The insurance sector continues to display balance sheet resilience, with a consolidated solvency ratio above the minimum threshold limit. **Impact Analysis** **RBI** *Impact* * The RBI released the FSR to provide insights into the stability and risks of the Indian financial system. *Action Required* * Continue monitoring and responding to the factors identified in the report to ensure financial stability. **Financial Institutions (SCBs, NBFCs, Insurance Companies)** *Impact* * The report assesses their current financial health and resilience to potential economic shocks. *Action Required* * Maintain strong capital and liquidity buffers, improve asset quality, and address identified vulnerabilities to ensure continued stability. **Financial Stability and Development Council (FSDC)** *Impact* * The FSR reflects the collective assessment of the FSDC's Sub-Committee. *Action Required* * Utilize the report's findings to inform policy decisions and strategies for maintaining financial stability. **Investors and the General Public** *Impact* * The report provides insights into the stability of the financial system, which can influence investor confidence. *Action Required* * Stay informed about the findings of the FSR and its implications for the Indian economy.

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