Reserve Bank of India (RBI) released the December 2025
Financial Stability Report to assess the resilience of the Indian financial
system and identify risks to financial stability.
Key highlights of the report
Global economy
¨
Showing resilience,
supported by fiscal measures, front-loaded trade, and strong AI-related
investment.
¨
Downside risks persist
due to still elevated uncertainty, high public debt, and the risk of a
disorderly market correction.
¨
Growing underlying
vulnerabilities in Global financial markets: 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.
¨
A stablecoin is a
cryptocurrency whose value is designed to be stable, typically by being pegged
to a fiat currency like the U.S. dollar.
¨
Resilient Indian Economy:
Despite an uncertain and challenging global economic backdrop, it continues to
grow strongly, underpinned by robust domestic demand, benign inflation, and
prudent macroeconomic policies.
¨
SCBs financial health: The
health of the scheduled commercial banks (SCBs) remains sound with strong
capital and liquidity buffers, improved asset quality and robust profitability.
Positive Macro stress test results
¨
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.
