RBI releases the Financial Stability Report, December 2025

**Executive Summary** The Reserve Bank released the December 2025 edition of the Financial Stability Report (FSR) on December 31, 2025. The report reflects the assessment of the Financial Stability and Development Council (FSDC) regarding the resilience of the Indian financial system and associated risks. The press release number is 2025-2026/1807. **Key Points / Main Content** *Global Economy & Financial Markets* * The global economy is resilient but faces downside risks including uncertainty, high public debt, and potential market correction. * Global financial markets show vulnerabilities despite a strong appearance, stemming from rising equities, the role of non-bank intermediaries, interconnectedness with banks, and growth of stablecoins. *Indian Economy & Domestic Financial System* * The Indian economy continues to grow strongly despite global challenges, supported by domestic demand, benign inflation, and macroeconomic policies. * The domestic financial system is robust with strong balance sheets and low market volatility, but faces near-term risks from geopolitical and trade-related uncertainties. *Scheduled Commercial Banks (SCBs)* * SCBs are in good health with strong capital and liquidity buffers, improved asset quality, and profitability. * Stress tests confirm SCBs’ resilience to withstand losses under adverse scenarios and maintain capital buffers above the regulatory minimum; stress tests also confirm the resilience of mutual funds and clearing corporations. *Non-Banking Financial Companies (NBFCs) & Insurance Sector* * NBFCs remain robust, supported by strong capital buffers, solid earnings, and improving asset quality. * The insurance sector displays balance sheet resilience with a consolidated solvency ratio above the minimum threshold limit. **Impact Analysis** **Scheduled Commercial Banks (SCBs)** *Impact:* The report validates the strength of SCBs. They need to maintain current high standards and be vigilant against geopolitical and trade-related risks. *Action Required:* Continue to maintain strong capital and liquidity buffers, monitor asset quality, and stress-test for external uncertainties. **Non-Banking Financial Companies (NBFCs)** *Impact:* The report confirms the robustness of NBFCs. They need to focus on upholding strong capital positions and asset quality. *Action Required:* Sustain capital buffers, solid earnings, and asset quality improvements. **Insurance Sector** *Impact:* The sector is confirmed to be resilient. They need to remain focused on maintaining balance sheet strength. *Action Required:* Continue to maintain balance sheet resilience and a consolidated solvency ratio above the minimum threshold limit. **Financial Stability and Development Council (FSDC)** *Impact:* The report is the collective assessment of the sub-committee of the FSDC. The Council will be responsible for ongoing monitoring of the identified risks and vulnerabilities. *Action Required:* Continue to monitor the financial system for risks and vulnerabilities.

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