**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 Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system and risks to financial stability.
**Key Points / Main Content**
*Global Economic and Financial Market Conditions*
* The global economy is resilient, supported by fiscal measures and AI-related investment; however, downside risks persist due to uncertainty and high debt.
* Global financial markets show growing vulnerabilities, with sharp rises in equities, the role of non-bank intermediaries, bank interconnectedness, and stablecoin growth heightening fragilities.
*Indian Economic and Financial System Resilience*
* The Indian economy continues to grow strongly, supported by domestic demand.
* The domestic financial system is robust, bolstered by strong balance sheets.
* However, near-term risks from external uncertainties exist.
*Sector-Specific Assessments*
* Scheduled Commercial Banks (SCBs) maintain sound health with strong capital and liquidity buffers and improved asset quality.
* Macro stress tests affirm the resilience of SCBs, mutual funds, and clearing corporations.
* Non-Banking Financial Companies (NBFCs) remain robust with strong capital buffers and solid earnings.
* The insurance sector displays balance sheet resilience, with solvency ratios above the minimum threshold.
**Impact Analysis**
**Scheduled Commercial Banks (SCBs)**
*Impact*
SCBs are affirmed to be in sound health, but need to be aware of external uncertainties and continue to maintain strong capital and liquidity buffers.
*Action Required*
Continue to focus on maintaining strong capital and liquidity buffers.
**Non-Banking Financial Companies (NBFCs)**
*Impact*
NBFCs are confirmed to be robust.
*Action Required*
Sustain capital buffers, solid earnings, and improving asset quality.
**Insurance Sector**
*Impact*
The insurance sector shows balance sheet resilience.
*Action Required*
Maintain consolidated solvency ratio above the minimum threshold limit.
**Mutual Funds and Clearing Corporations**
*Impact*
The resilience of mutual funds and clearing corporations is confirmed through stress tests.
*Action Required*
Monitor and manage potential losses under adverse scenarios.
**Financial Stability and Development Council (FSDC)**
*Impact*
The FSDC's collective assessment is reflected in the report, providing a view on the Indian financial system's resilience and risks.
*Action Required*
Use the report's findings to inform financial stability policies and risk management strategies.
Key Entities Referenced
Financial Stability Report (FSR): A 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 and risks to financial stability.
Financial Stability and Development Council (FSDC): Council whose Sub-Committee's assessment is reflected in the Financial Stability Report.
Reserve Bank of India: The central bank that released the Financial Stability Report.
Mumbai: Location of the Department of Communication, Central Office of Reserve Bank of India.
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