**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.
**Key Points / Main Content**
*Global Economic and Financial Markets*
* The global economy has been resilient but faces downside risks due to uncertainty, public debt, and potential market correction.
* Global financial markets show growing vulnerabilities including risks in equities and other risk assets, non-bank financial intermediaries, interconnectedness with banks, and the growth of stablecoins.
*Indian Economy and Financial System*
* The Indian economy continues to grow strongly despite global challenges, supported by domestic demand, benign inflation, and prudent macroeconomic policies.
* The domestic financial system remains robust, supported by strong balance sheets and low financial market volatility, but faces near-term external risks.
*Financial Institutions*
* Scheduled commercial banks (SCBs) remain healthy with strong capital and liquidity buffers, improved asset quality, and profitability. Macro stress tests affirm their resilience.
* Non-banking financial companies (NBFCs) remain robust supported by strong capital buffers, solid earnings, and improving asset quality.
* The insurance sector displays balance sheet resilience and maintains a consolidated solvency ratio above the minimum threshold.
**Impact Analysis**
**Scheduled Commercial Banks (SCBs) Impact**
* **Impact:** SCBs are shown to be resilient and healthy but must continue to maintain strong capital and liquidity buffers.
* **Action Required:** Maintain strong capital and liquidity buffers, and proactively manage asset quality and profitability to withstand hypothetical adverse scenarios.
**Non-Banking Financial Companies (NBFCs) Impact**
* **Impact:** NBFCs are shown to be robust but must continue to maintain strong capital buffers and improve asset quality.
* **Action Required:** Sustain robust capital buffers, focus on solid earnings, and continue improving asset quality to maintain resilience.
**Insurance Sector Impact**
* **Impact:** The insurance sector is shown to be resilient.
* **Action Required:** Maintain balance sheet resilience and a consolidated solvency ratio above the minimum threshold limit.
Key Entities Referenced
Financial Stability Report (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.
Financial Stability and Development Council (FSDC): Its Sub-Committee's assessment is reflected in the Financial Stability Report.
Reserve Bank of India: Released the Financial Stability Report
Mumbai: Location of the Department of Communication, Central Office of 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