**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) regarding the resilience of the Indian financial system and its associated risks. The report highlights the current state of the global and domestic economies and the financial sectors.
**Key Points / Main Content**
*Global Economic and Financial Market Overview*
* Global economy is resilient despite downside risks related to uncertainty, public debt, and potential market corrections.
* Global financial markets show underlying vulnerabilities, including sharp rises in equities, the role of non-bank financial intermediaries, interconnectedness with banks, and growth of stablecoins.
*Indian Economy and Financial System*
* The Indian economy exhibits strong growth, supported by domestic demand, benign inflation, and macroeconomic policies, despite global challenges.
* The domestic financial system remains robust, supported by strong balance sheets, easy financial conditions, and low market volatility; however, near-term risks from external uncertainties exist.
*Sector-Specific Assessments*
* Scheduled Commercial Banks (SCBs) maintain strong capital and liquidity buffers with improved asset quality and robust profitability.
* Macro stress tests confirm the resilience of SCBs, mutual funds, and clearing corporations under adverse scenarios.
* Non-Banking Financial Companies (NBFCs) remain robust due to strong capital buffers, solid earnings, and improved asset quality.
* The insurance sector demonstrates balance sheet resilience, and the consolidated solvency ratio is above the minimum threshold.
**Impact Analysis**
*Scheduled Commercial Banks (SCBs)*
**Impact:** SCBs are confirmed to be in sound health with sufficient buffers to withstand hypothetical adverse scenarios.
**Action Required:** Maintain strong capital and liquidity buffers.
*Non-Banking Financial Companies (NBFCs)*
**Impact:** NBFCs are affirmed to be robust, supported by strong financials.
**Action Required:** Maintain strong capital buffers, solid earnings, and asset quality.
*Insurance Sector*
**Impact:** The sector remains resilient, exceeding minimum solvency requirements.
**Action Required:** Maintain balance sheet resilience and solvency ratio above the minimum threshold.
*Mutual Funds and Clearing Corporations*
**Impact:** Confirmed resilience under stress tests.
**Action Required:** Continue to maintain resilience under adverse scenarios.
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): A council whose Sub-Committee assesses the resilience of the Indian financial system.
Reserve Bank of India: The central bank that releases the Financial Stability Report.
Mumbai: Location of the Department of Communication, Central Office of the 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