**Executive Summary**
The Reserve Bank of India 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 and Domestic Economic Conditions**
* The global economy has been resilient but faces downside risks due to uncertainty, high public debt, and potential market corrections.
* Global financial markets show underlying vulnerabilities due to factors like rising equities, non-bank intermediaries, interconnectedness with banks, and the growth of stablecoins.
* The Indian economy continues to grow strongly despite global challenges, supported by domestic demand, benign inflation, and prudent policies.
* The domestic financial system remains robust with strong balance sheets and low market volatility, though near-term risks exist from external uncertainties.
**Financial Sector Performance**
* Scheduled commercial banks (SCBs) are healthy with strong capital and liquidity buffers, improved asset quality, and robust profitability.
* Macro stress tests confirm SCBs' resilience under adverse scenarios, maintaining capital buffers above the regulatory minimum; mutual funds and clearing corporations also demonstrate resilience.
* Non-banking financial companies (NBFCs) remain robust, supported by strong capital buffers, earnings, and asset quality.
* The insurance sector shows balance sheet resilience, with the solvency ratio above the minimum limit.
**Impact Analysis**
**Scheduled Commercial Banks (SCBs)**
* **Impact:** The report affirms the overall health and resilience of SCBs.
* **Action Required:** SCBs need to maintain their strong capital and liquidity buffers and continue to improve asset quality and profitability.
**Non-Banking Financial Companies (NBFCs)**
* **Impact:** The report highlights the robust condition of NBFCs.
* **Action Required:** NBFCs need to sustain their strong capital buffers, solid earnings, and focus on improving asset quality.
**Insurance Sector**
* **Impact:** The report validates the balance sheet resilience of the insurance sector.
* **Action Required:** The insurance sector must continue to maintain a consolidated solvency ratio above the minimum threshold limit.
Key Entities Referenced
Financial Stability Report (FSR): Report 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 Financial Stability Report.
Reserve Bank of India: Central bank that released 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
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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