**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 remains resilient but faces downside risks due to uncertainty, high public debt, and potential market corrections.
* Global financial markets appear strong but exhibit vulnerabilities, with rising equities, expanding non-bank financial intermediaries, and increasing interconnectedness that heighten system fragilities.
*Indian Economy and Financial System*
* The Indian economy continues to grow strongly despite global challenges due to robust domestic demand, benign inflation, and macroeconomic policies.
* The domestic financial system is robust, supported by strong balance sheets and financial conditions. Near-term risks exist due to geopolitical and trade-related uncertainties.
*Scheduled Commercial Banks (SCBs)*
* SCBs maintain sound health with strong capital and liquidity buffers, improved asset quality, and robust profitability.
* Macro stress tests confirm the resilience of SCBs to withstand losses under adverse scenarios and maintain capital buffers above regulatory minimums. Stress tests also confirm the resilience of mutual funds and clearing corporations.
*Non-Banking Financial Companies (NBFCs) and Insurance Sector*
* NBFCs remain robust with strong capital buffers, solid earnings, and improving asset quality.
* The insurance sector shows balance sheet resilience and maintains a consolidated solvency ratio above the minimum threshold.
**Impact Analysis**
**SCBs (Scheduled Commercial Banks)**
*Impact*
SCBs are positively impacted by the report's findings of their resilience and soundness.
*Action Required*
Continue maintaining capital and liquidity buffers to withstand potential losses, and uphold performance standards.
**NBFCs (Non-Banking Financial Companies)**
*Impact*
The NBFCs are reassured of the continued soundness supported by strong buffers and improving asset quality.
*Action Required*
Continue maintaining capital and liquidity buffers and improve asset quality.
**Insurance Sector**
*Impact*
Confirmed balance sheet resilience and solvency.
*Action Required*
Maintain balance sheet resilience and solvency.
**Financial Stability and Development Council (FSDC)**
*Impact*
Informed on the resilience of the Indian financial system and the associated risks.
*Action Required*
Use the report for policymaking and strategic planning to maintain financial stability.
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 on the resilience of the Indian financial system and risks to financial stability.
Financial Stability and Development Council (FSDC): An organization (and its sub-committee) whose assessment of the Indian financial system's resilience is reflected in the Financial Stability Report.
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