**Executive Summary**
The Reserve Bank of India (RBI) released the December 2025 edition of the Financial Stability Report (FSR) on December 31, 2025. The report reflects the Sub-Committee of the Financial Stability and Development Council (FSDC)'s assessment of the Indian financial system's resilience and associated risks. The report highlights the current state and potential vulnerabilities of the global and domestic financial landscape.
**Key Points / Main Content**
*Global Economic and Financial Overview*
- Global economy shows resilience but faces downside risks from uncertainty, high public debt, and potential market corrections.
- Global financial markets exhibit vulnerabilities despite appearing strong, influenced by rising equities, non-bank intermediaries, interconnectedness with banks, and stablecoin growth.
*Indian Economy and Financial System*
- Indian economy continues to grow strongly, supported by domestic demand, benign inflation, and macroeconomic policies.
- Domestic financial system remains robust with strong balance sheets, easy financial conditions, and low market volatility; however, near-term risks from geopolitical and trade uncertainties persist.
*Sector-Specific Highlights*
- Scheduled Commercial Banks (SCBs) maintain sound health with strong capital and liquidity buffers, improved asset quality, and profitability.
- Macro stress tests confirm the resilience of SCBs, mutual funds, and clearing corporations to withstand losses under adverse scenarios and maintain capital buffers above regulatory minimums.
- Non-Banking Financial Companies (NBFCs) remain robust with strong capital buffers, solid earnings, and improving asset quality.
- The insurance sector displays balance sheet resilience, and the consolidated solvency ratio remains above the minimum threshold limit.
**Impact Analysis**
*Scheduled Commercial Banks (SCBs)*
**Impact:** The report affirms the sound health and resilience of SCBs.
**Action Required:** SCBs need to maintain strong capital and liquidity buffers, focus on asset quality, and ensure resilience against potential adverse scenarios as highlighted by stress tests.
*Non-Banking Financial Companies (NBFCs)*
**Impact:** The report confirms the robustness of NBFCs.
**Action Required:** NBFCs should maintain strong capital buffers, focus on earnings stability, and continue improving asset quality.
*Insurance Sector*
**Impact:** The report highlights the resilience of the insurance sector.
**Action Required:** The insurance sector must maintain balance sheet resilience and ensure that the consolidated solvency ratio remains above the minimum threshold limit.
*Mutual Funds and Clearing Corporations*
**Impact:** The report confirms their resilience to withstand losses under hypothetical adverse scenarios.
**Action Required:** There is no explicit action required, but mutual funds and clearing corporations need to remain vigilant and continue strengthening their risk management practices to maintain resilience.
Key Entities Referenced
Financial Stability Report (FSR): December 2025 edition, reflecting the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system
Financial Stability and Development Council (FSDC): Council whose sub-committee's assessment is reflected in the FSR
Reserve Bank of India: The releasing organization of the Financial Stability Report
Mumbai: Location of the Department of Communication, Central Office.
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