**Executive Summary**
The Reserve Bank of India (RBI) released the December 2025 edition of the Financial Stability Report (FSR) on December 31, 2025. This report 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 risks.
**Key Points / Main Content**
*Global Economic and Financial Conditions*
* The global economy has been resilient, but downside risks persist due to uncertainty, high public debt, and potential market corrections.
* Global financial markets appear superficially strong, but underlying vulnerabilities exist due to sharp rises in risk assets, the role of non-bank financial intermediaries, and the growth of stablecoins.
*Indian Economy and Financial System*
* The Indian economy continues to grow strongly, supported by domestic demand, benign inflation, and prudent macroeconomic policies.
* The domestic financial system remains robust due to strong balance sheets, easy financial conditions, and low financial market volatility.
* Near-term risks exist due to geopolitical and trade-related uncertainties.
*Sector-Specific Resilience*
* Scheduled commercial banks (SCBs) maintain sound health with strong capital and liquidity buffers, improved asset quality, and robust profitability.
* Macro stress tests confirm SCBs' resilience under adverse scenarios, maintaining capital buffers above regulatory minimums. Stress tests also confirm the resilience of mutual funds and clearing corporations.
* Non-banking financial companies (NBFCs) remain robust with strong capital buffers, solid earnings, and improving asset quality.
* The insurance sector displays balance sheet resilience, maintaining a consolidated solvency ratio above the minimum threshold.
**Impact Analysis**
**Scheduled Commercial Banks (SCBs)**
* **Impact:** SCBs need to maintain strong capital and liquidity buffers and sustain improved asset quality and profitability. Macro stress tests are being conducted to ensure resilience.
* **Action Required:** SCBs should maintain vigilance against potential losses and ensure compliance with regulatory minimums.
**Non-Banking Financial Companies (NBFCs)**
* **Impact:** NBFCs should continue to maintain their robust capital buffers, solid earnings, and improve their asset quality.
* **Action Required:** Continue focusing on strengthening the financial position and managing risks.
**Insurance Sector**
* **Impact:** The sector needs to maintain balance sheet resilience and ensure the consolidated solvency ratio remains above the minimum threshold limit.
* **Action Required:** Maintain balance sheet resilience.
Key Entities Referenced
Financial Stability Report (FSR): Report reflecting the assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on the Indian financial system's resilience.
Financial Stability and Development Council (FSDC): Council assessing the resilience of the Indian financial system.
Reserve Bank of India: Released 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