RBI releases the Financial Stability Report, December 2025

**Executive Summary** This press release from the Reserve Bank of India, dated December 31, 2025, announces 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 associated risks. **Key Points / Main Content** *Global Economy and Financial Markets:* * The global economy is resilient, supported by fiscal measures, trade, and AI investments, but downside risks persist due to uncertainty, public debt, and potential market corrections. * Global financial markets appear robust but show growing underlying vulnerabilities, including the rise in equities and risk assets, the expanding role and interconnectedness of non-bank financial intermediaries, and the growth of stablecoins. *Indian Economy:* * The Indian economy continues to grow strongly despite global challenges, supported by domestic demand, benign inflation, and macroeconomic policies. * The domestic financial system remains robust and resilient with strong balance sheets, easy financial conditions, and low financial market volatility, though near-term risks from external uncertainties exist. *Financial Institutions:* * Scheduled commercial banks (SCBs) maintain sound health with strong capital and liquidity buffers, improved asset quality, and robust profitability. * Macro stress tests affirm the resilience of SCBs to withstand losses under adverse scenarios and maintain capital buffers above the regulatory minimum, also confirming 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 maintains balance sheet resilience, with the consolidated solvency ratio above the minimum threshold. **Impact Analysis** **Scheduled Commercial Banks (SCBs), Mutual Funds, and Clearing Corporations** * **Impact:** SCBs, mutual funds, and clearing corporations are shown to be resilient with strong capital and liquidity buffers. * **Action Required:** Maintain capital buffers above the regulatory minimum. **Non-Banking Financial Companies (NBFCs)** * **Impact:** NBFCs remain robust. * **Action Required:** Maintain strong capital buffers, solid earnings, and improving asset quality. **Insurance Sector** * **Impact:** The insurance sector continues to display balance sheet resilience. * **Action Required:** Maintain a consolidated solvency ratio above the minimum threshold limit.

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