**Executive Summary**
The Reserve Bank released the Financial Stability Report (FSR), December 2025 edition. The report 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. This release occurred on December 31, 2025.
**Key Points / Main Content**
* **Global Economic & Financial Environment:**
* The global economy is resilient but faces persistent downside risks due to uncertainty, high public debt, and the potential for market corrections.
* Global financial markets appear strong but exhibit underlying vulnerabilities such as rising equities, the role of non-bank financial intermediaries, and the growth of stablecoins.
* **Indian Economy:**
* The Indian economy is growing strongly, supported by domestic demand, benign inflation, and macroeconomic policies despite global challenges.
* The domestic financial system is robust, supported by balance sheets and easy financial conditions, but faces near-term risks from external geopolitical and trade uncertainties.
* **Financial Institutions:**
* Scheduled commercial banks (SCBs) maintain sound health with strong capital and liquidity buffers, improved asset quality, and robust profitability.
* Stress tests confirm the resilience of SCBs under adverse scenarios, as well as the resilience of mutual funds and clearing corporations.
* Non-banking financial companies (NBFCs) remain robust with strong capital buffers, solid earnings, and improving asset quality.
* The insurance sector shows balance sheet resilience with the solvency ratio above the minimum threshold.
**Impact Analysis**
**Stakeholder: Scheduled Commercial Banks (SCBs)**
* **Impact:** SCBs are confirmed to be in a healthy financial state, well-prepared to handle hypothetical adverse scenarios and retain capital buffers above regulatory requirements.
* **Action Required:** Maintain strong capital and liquidity buffers.
**Stakeholder: Non-Banking Financial Companies (NBFCs)**
* **Impact:** NBFCs are also confirmed to be in a robust state.
* **Action Required:** Maintain strong capital buffers, solid earnings, and improving asset quality.
**Stakeholder: Insurance Sector**
* **Impact:** The Insurance Sector continues to maintain the balance sheet.
* **Action Required:** Ensure the consolidated solvency ratio remains above the minimum threshold limit.
Key Entities Referenced
Financial Stability Report (FSR): Report released by the Reserve Bank reflecting the 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): Council whose Sub-Committee provides assessment on the resilience of the Indian financial system.
Reserve Bank of India: Releases the Financial Stability Report.
Mumbai: Location of the Department of Communication 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