**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) on the resilience of the Indian financial system and risks to financial stability.
**Key Points / Main Content**
**Global and Indian Economy**
* The global economy has shown resilience, supported by fiscal measures, front-loaded trade, and AI-related investment, but faces downside risks due to uncertainty, high public debt, and potential market corrections.
* Global financial markets show growing underlying vulnerabilities including increased risk in equities, the role of non-bank financial intermediaries, interconnection with banks, and stablecoins.
* The Indian economy continues to grow strongly due to robust domestic demand, benign inflation, and prudent macroeconomic policies, despite global challenges.
**Domestic Financial System**
* The domestic financial system remains robust, supported by strong balance sheets, easy financial conditions, and low market volatility, but faces near-term risks from geopolitical and trade uncertainties.
* Scheduled commercial banks (SCBs) maintain strong capital and liquidity buffers, improved asset quality, and robust profitability. Macro stress tests show SCBs can withstand losses and maintain capital above regulatory minimums; resilience confirmed for mutual funds and clearing corporations.
* Non-banking financial companies (NBFCs) remain robust with strong capital buffers, earnings, and improving asset quality.
* The insurance sector continues to display balance sheet resilience with solvency ratios above minimum thresholds.
**Impact Analysis**
**Scheduled Commercial Banks (SCBs)**
*Impact:* Affirmation of their health and resilience despite hypothetical adverse scenarios.
*Action Required:* Maintain strong capital and liquidity buffers, asset quality, and profitability to withstand potential losses.
**Non-Banking Financial Companies (NBFCs)**
*Impact:* Recognition of their robust financial state.
*Action Required:* Maintain capital buffers, focus on solid earnings, and continue improving asset quality.
**Insurance Sector**
*Impact:* Acknowledgment of their balance sheet resilience and solvency.
*Action Required:* Maintain solvency ratios above the minimum threshold limit.
**Mutual Funds and Clearing Corporations**
*Impact:* Recognition of their financial resilience.
*Action Required:* Maintain financial resilience to withstand possible market stress.
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 and risks to financial stability.
Financial Stability and Development Council (FSDC): Council whose Sub-Committee's assessment is reflected in the Financial Stability Report (FSR).
Reserve Bank of India: The releasing entity for the Financial Stability Report (FSR).
Mumbai: Location of the Department of Communication, Central Office of RBI.
Scheduled commercial banks (SCBs): Mentioned in relation to maintaining strong capital and liquidity buffers and improved asset quality
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