**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 Sub-Committee of the Financial Stability and Development Council's (FSDC) assessment of the Indian financial system's resilience and risks to financial stability. The press release number for this report is 2025-2026/1807.
**Key Points / Main Content**
* **Global and Indian Economy:**
* The global economy has been resilient but faces risks due to uncertainty, public debt, and market correction potential.
* Global financial markets show vulnerabilities despite appearing strong on the surface.
* The Indian economy continues to grow strongly despite global challenges due to domestic demand and sound policies.
* **Domestic Financial System:**
* The domestic financial system is robust, with strong balance sheets and low market volatility, but faces external risks.
* **Scheduled Commercial Banks (SCBs):**
* SCBs maintain good health with strong capital and liquidity buffers, asset quality, and profitability.
* Stress tests show SCBs can withstand losses and maintain capital above regulatory minimums.
* Stress tests also confirm the resilience of mutual funds and clearing corporations.
* **Non-Banking Financial Companies (NBFCs):**
* NBFCs remain robust, supported by capital buffers, earnings, and asset quality.
* **Insurance Sector:**
* The insurance sector displays balance sheet resilience, with solvency ratios above the minimum limit.
**Impact Analysis**
**Scheduled Commercial Banks (SCBs)**
* **Impact:** SCBs are affirmed to be in sound health, but must continue maintaining strong capital and liquidity buffers.
* **Action Required:** Maintain capital buffers well above regulatory minimum and continue to undergo regular stress testing
**Non-Banking Financial Companies (NBFCs)**
* **Impact:** NBFCs are highlighted as robust, but need to maintain strong capital positions and asset quality.
* **Action Required:** Maintain strong capital buffers and monitor asset quality.
**Insurance Sector**
* **Impact:** The insurance sector is confirmed to be resilient, requiring continued maintenance of solvency ratios.
* **Action Required:** Ensure consolidated solvency ratio remains above the minimum threshold limit.
Key Entities Referenced
Financial Stability Report (FSR): A report released by the Reserve Bank of India, reflecting the 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): A council whose Sub-Committee's collective assessment is reflected in the Financial Stability Report (FSR).
Reserve Bank of India: The central bank of India, which releases the Financial Stability Report.
Scheduled Commercial Banks (SCBs): These banks are mentioned regarding their health and stress test results.
Non-banking Financial Companies (NBFCs): These companies are mentioned regarding their robustness.
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