**Executive Summary**
The Reserve Bank 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) 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 faces downside risks including elevated uncertainty, high public debt, and the risk of a disorderly market correction.
* Global financial markets appear strong but show growing underlying vulnerabilities, including the rise in equities and other risk assets.
**Indian Economy**
* The Indian economy continues to grow strongly, underpinned by robust domestic demand, benign inflation, and prudent macroeconomic policies, despite an uncertain global economic backdrop.
* The domestic financial system remains robust and resilient, but faces near-term risks from external uncertainties.
**Financial Institutions**
* Scheduled commercial banks (SCBs) remain sound with strong capital and liquidity buffers, improved asset quality and robust profitability.
* Macro stress tests affirm the resilience of SCBs to withstand losses and maintain capital buffers.
* 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, with solvency ratios remaining above the minimum threshold.
**Impact Analysis**
**Scheduled Commercial Banks (SCBs)**
*Impact:* SCBs' resilience is reaffirmed by stress tests, validating their ability to withstand adverse scenarios.
*Action Required:* Maintain strong capital and liquidity buffers.
**Non-Banking Financial Companies (NBFCs)**
*Impact:* The report confirms their robustness and improved asset quality.
*Action Required:* Continue to maintain strong capital buffers, solid earnings, and focus on improving asset quality.
**Insurance Sector**
*Impact:* The sector's resilience is validated.
*Action Required:* Maintain balance sheet resilience and consolidated solvency ratio above the minimum threshold limit.
Key Entities Referenced
Financial Stability Report (FSR): A report 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): An organization whose Sub-Committee's assessment is reflected in the Financial Stability Report.
Reserve Bank of India: The releasing organization of the Financial Stability Report.
Mumbai: Location of the Reserve Bank of India's 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