**Executive Summary**
The Reserve Bank of India (RBI) has released the December 2025 Financial Stability Report (FSR). This report provides an assessment of the Indian financial system's resilience and identifies risks to financial stability. The report was released on December 31, 2025.
**Key Points / Main Content**
**Global Economic Landscape**
* The global economy shows resilience due to fiscal measures, trade, and AI investment, but faces persistent downside risks from uncertainty, high public debt, and potential market corrections.
* Global financial markets exhibit surface strength but underlying vulnerabilities are increasing due to rising equities, expanding non-bank financial intermediaries, interconnectedness with banks, and stablecoin growth.
**Indian Economic Performance**
* The Indian economy continues to grow strongly amidst a challenging global backdrop, supported by domestic demand, low inflation, and prudent macroeconomic policies.
**Domestic Financial System Resilience**
* The Indian financial system is robust and resilient, characterized by strong balance sheets, favorable financial conditions, and low market volatility.
* Near-term risks exist from external geopolitical and trade uncertainties.
**Scheduled Commercial Banks (SCBs)**
* SCBs maintain sound health with strong capital and liquidity buffers, improved asset quality, and robust profitability.
* Macro stress tests confirm SCBs' resilience to adverse scenarios, maintaining capital buffers above regulatory minimums.
* Stress tests also validate 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 demonstrates balance sheet resilience, with its consolidated solvency ratio remaining above the minimum threshold.
**Impact Analysis**
**Scheduled Commercial Banks (SCBs)**
* **Impact:** The report highlights their strong performance and resilience, affirming their capacity to withstand adverse scenarios.
* **Action Required:** No specific action is mentioned; the report serves as an assessment.
**Non-Banking Financial Companies (NBFCs)**
* **Impact:** The report indicates their robust condition due to strong capital, earnings, and asset quality.
* **Action Required:** No specific action is mentioned; the report serves as an assessment.
**Mutual Funds**
* **Impact:** Stress tests confirm their resilience to hypothetical adverse scenarios.
* **Action Required:** No specific action is mentioned; the report serves as an assessment.
**Clearing Corporations**
* **Impact:** Stress tests confirm their resilience to hypothetical adverse scenarios.
* **Action Required:** No specific action is mentioned; the report serves as an assessment.
**Insurance Sector**
* **Impact:** The sector shows balance sheet resilience with its solvency ratio above the minimum threshold.
* **Action Required:** No specific action is mentioned; the report serves as an assessment.
Key Entities Referenced
Financial Stability Report (FSR): A report released by the Reserve Bank of India assessing the resilience of the Indian financial system.
Sub-Committee of the Financial Stability and Development Council (FSDC): A committee whose collective assessment of the financial system is reflected in the FSR.
Scheduled Commercial Banks (SCBs): A category of banks whose health, capital, liquidity, asset quality, and profitability are assessed in the report.
Non-banking financial companies (NBFCs): Financial entities whose robustness is assessed based on capital buffers, earnings, and asset quality.
Reserve Bank of India: The institution releasing the Financial Stability Report and overseeing the Indian financial system.
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