**Executive Summary**
The Reserve Bank of India (RBI) released the December 2025 edition of the Financial Stability Report (FSR) on December 31, 2025. The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) regarding the resilience of the Indian financial system and its risks to financial stability.
**Key Points / Main Content**
*Global Economy & Markets:*
* The global economy is resilient but faces downside risks from uncertainty, high public debt, and potential market corrections.
* Global financial markets show underlying vulnerabilities, particularly due to equities, risk assets, non-bank financial intermediaries, and stablecoins.
*Indian Economy:*
* The Indian economy continues to grow strongly, supported by domestic demand, benign inflation, and macroeconomic policies, despite global challenges.
*Domestic Financial System:*
* The domestic financial system remains robust and resilient, supported by strong balance sheets.
* Near-term risks exist from external uncertainties.
*Scheduled Commercial Banks (SCBs):*
* SCBs remain healthy with strong capital and liquidity buffers, improved asset quality, and profitability.
* Stress tests affirm SCBs' resilience under adverse scenarios.
*Non-Banking Financial Companies (NBFCs):*
* NBFCs remain robust supported by strong capital buffers, solid earnings, and improving asset quality.
*Insurance Sector:*
* The insurance sector shows balance sheet resilience.
**Impact Analysis**
**Scheduled Commercial Banks (SCBs) Impact**
*Impact:* The report validates the SCBs' current health and resilience. Macro stress tests confirm resilience to withstand losses under hypothetical adverse scenarios and maintain capital buffers above the regulatory minimum.
*Action Required:* SCBs need to maintain strong capital and liquidity buffers.
**Non-Banking Financial Companies (NBFCs) Impact**
*Impact:* The report confirms the NBFCs' robustness, supported by strong capital buffers, solid earnings, and improving asset quality.
*Action Required:* No specific action mentioned, but NBFCs should maintain current performance levels.
**Insurance Sector Impact**
*Impact:* The report indicates balance sheet resilience within the insurance sector.
*Action Required:* No specific action mentioned, but the insurance sector should remain above the minimum threshold limit.
**Mutual Funds and Clearing Corporations Impact**
*Impact:* Stress tests also confirm the resilience of mutual funds and clearing corporations.
*Action Required:* No specific action mentioned, but Mutual Funds and Clearing Corporations need to maintain the current performance levels.
Key Entities Referenced
Financial Stability Report (FSR): December 2025 edition reflecting the Sub-Committee's assessment of the Indian financial system's resilience.
Financial Stability and Development Council (FSDC): Council whose Sub-Committee's assessment is reflected in the FSR.
Reserve Bank of India: The releasing authority of the Financial Stability Report.
Mumbai: Location of the Department of Communication.
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