**Executive Summary**
This document is a press release from the Reserve Bank of India (RBI) announcing the release of the December 2025 edition of the Financial Stability Report (FSR). The report reflects the assessment of the Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system. The report indicates that the Indian economy continues to grow strongly and the domestic financial system remains robust and resilient.
**Key Points / Main Content**
* **Global Economy & Markets:**
* The global economy is resilient, supported by fiscal measures and AI-related investment, but faces downside risks due to uncertainty and high public debt.
* Global financial markets appear strong but exhibit underlying vulnerabilities such as rising equities and interconnectedness between financial entities, heightening fragilities.
* **Indian Economy & Financial System:**
* The Indian economy continues to grow strongly, underpinned by domestic demand.
* The domestic financial system remains robust, supported by strong balance sheets.
* Near-term risks exist from external uncertainties.
* **Financial Institutions:**
* Scheduled commercial banks (SCBs) maintain strong capital and liquidity buffers.
* Macro stress tests affirm SCBs' resilience to withstand losses.
* Non-banking financial companies (NBFCs) remain robust with strong capital buffers.
* The insurance sector displays balance sheet resilience.
**Impact Analysis**
**Stakeholder: Scheduled Commercial Banks (SCBs)**
* **Impact:** The report affirms the soundness of SCBs due to their strong capital and liquidity buffers, improved asset quality, and robust profitability.
* **Action Required:** SCBs should continue to maintain strong capital buffers and undergo stress tests to ensure resilience against hypothetical adverse scenarios.
**Stakeholder: Non-Banking Financial Companies (NBFCs)**
* **Impact:** The report recognizes the robustness of NBFCs, supported by strong capital buffers, solid earnings, and improving asset quality.
* **Action Required:** Maintain strong capital buffers, solid earnings, and improving asset quality.
**Stakeholder: Insurance Sector**
* **Impact:** Balance sheet resilience, consolidated solvency ratio remained above the minimum threshold limit.
* **Action Required:** Ensure balance sheet resilience and that the consolidated solvency ratio remains above the minimum threshold limit.
Key Entities Referenced
Financial Stability Report (FSR): A report released by the Reserve Bank of India, reflecting 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): An organization whose Sub-Committee's collective assessment is reflected in the Financial Stability Report (FSR).
Reserve Bank of India: The central bank of India, responsible for releasing the Financial Stability Report.
Mumbai: Location of the Department of Communication, Central Office, of the 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