RBI releases the Financial Stability Report, December 2025

**Executive Summary** This document is a press release from the Reserve Bank of India (RBI), dated December 31, 2025, announcing the release of the 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. **Key Points / Main Content** * **Global Economy and Financial Markets:** * The global economy has been resilient, but downside risks remain due to uncertainty, high public debt, and the risk of a disorderly market correction. * Global financial markets appear superficially strong but exhibit underlying vulnerabilities. * The rise in equities and other risk assets, expanding non-bank financial intermediaries and interconnectivity with banks, and growth of stablecoins heighten global financial system fragilities. * **Indian Economy:** * Despite global challenges, the Indian economy continues to grow strongly due to robust domestic demand, benign inflation, and prudent macroeconomic policies. * The domestic financial system is robust and resilient, supported by strong balance sheets, easy financial conditions, and low financial market volatility. * **Financial Institutions:** * Scheduled commercial banks (SCBs) remain sound with strong capital and liquidity buffers, improved asset quality, and robust profitability. * Stress tests confirm the resilience of SCBs, mutual funds, and clearing corporations to withstand losses under adverse scenarios. * Non-banking financial companies (NBFCs) remain robust, supported by strong capital buffers, solid earnings, and improving asset quality. * The insurance sector demonstrates balance sheet resilience, with the consolidated solvency ratio remaining above the minimum threshold limit. **Impact Analysis** **Scheduled Commercial Banks (SCBs)** * **Impact:** The health of SCBs remains sound with strong capital and liquidity buffers, improved asset quality, and robust profitability. The results of macro stress tests affirm their resilience to withstand losses under hypothetical adverse scenarios and maintain capital buffers well above the regulatory minimum. * **Action Required:** Maintain strong capital and liquidity buffers and continue to improve asset quality. **Non-Banking Financial Companies (NBFCs)** * **Impact:** NBFCs remain robust supported by strong capital buffers, solid earnings, and improving asset quality. * **Action Required:** Sustain strong capital buffers and continue to improve asset quality and earnings. **Insurance Sector** * **Impact:** The insurance sector continues to display balance sheet resilience and the consolidated solvency ratio remained above the minimum threshold limit. * **Action Required:** Maintain balance sheet resilience and ensure the consolidated solvency ratio remains above the minimum threshold limit.

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