RBI releases the Financial Stability Report, December 2025

**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. The press release number for this report is 2025-2026/1807. **Key Points / Main Content** *Global Economic and Financial Market Overview* * The global economy shows resilience due to fiscal measures, front-loaded trade, and AI investments, but faces downside risks like uncertainty, public debt, and market correction. * Global financial markets appear strong on the surface but show growing underlying vulnerabilities, with sharp increases in equities and risk assets, the expanding role of non-bank financial intermediaries, their interconnectedness with banks, and the growth of stablecoins. *Indian Economy and Financial System* * The Indian economy continues to grow strongly despite global challenges, driven by domestic demand, benign inflation, and prudent macroeconomic policies. * The domestic financial system is robust, supported by strong balance sheets, easy financial conditions, and low financial market volatility. However, near-term risks from external geopolitical and trade uncertainties persist. *Banking and Non-Banking Sectors* * Scheduled commercial banks (SCBs) remain healthy with strong capital and liquidity buffers, improved asset quality, and profitability. * Macro stress tests affirm the resilience of SCBs to withstand losses 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) remain robust, supported by strong capital buffers, solid earnings, and improving asset quality. * The insurance sector continues to display balance sheet resilience, with the consolidated solvency ratio remaining above the minimum threshold. **Impact Analysis** **Financial Institutions (SCBs, NBFCs, Insurance Companies)** *Impact:* The report assesses the health and stability of these institutions. *Action Required:* Financial institutions need to review the FSR's findings to understand their risk exposure and resilience under various stress scenarios. They must ensure that they maintain adequate capital and liquidity buffers as per regulatory requirements. **Regulators (RBI, FSDC)** *Impact:* The report provides a comprehensive analysis of the financial system, informing regulatory policy and potential interventions. *Action Required:* The regulators need to use the findings of the FSR to formulate appropriate policies and regulatory measures to maintain financial stability. They should also closely monitor the identified vulnerabilities and take proactive steps to mitigate potential risks. **Investors and Market Participants** *Impact:* The report offers insights into the stability and potential risks within the financial system, which can influence investment decisions. *Action Required:* Investors and market participants should review the report to assess the overall health of the financial system and make informed decisions about their investments. They should be aware of the potential risks and vulnerabilities identified in the report.

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