RBI Financial Stability Report December 2025: Risk Review
Why in the news
The central bank issued its year-end stability assessment, flagging that outside shocks tied to geopolitics and trade are the main near-term worry for India’s economy and financial sector.
Key facts
- Release date: 31 December 2025; the report is half-yearly.
- Global growth stayed resilient on fiscal support, front-loaded trade and heavy AI investment, yet high public debt and policy uncertainty keep downside risks alive.
- RBI cautioned that surplus liquidity feeds risk-on sentiment; a sudden correction could spill over because markets are more interconnected.
Health of financial institutions
| Segment | Assessment in the report |
|---|---|
| Scheduled Commercial Banks | Strong capital and liquidity buffers; better asset quality and profits; stress tests show they stay above capital norms in severe scenarios |
| Urban Cooperative Banks | Mostly healthy with sound buffers; profits firm despite thinner net interest margins |
| NBFCs | Asset quality improving; profitability stable |
| Mutual funds and clearing corporations | Stress tests show resilience to adverse shocks |
| Insurance | Balance sheets resilient; solvency ratios above the regulatory minimum |
About the FSR
The Financial Stability Report is an RBI publication that pools the views of every sector regulator sitting on the FSDC Sub-Committee (Financial Stability and Development Council) and examines present and emerging stability risks.
Regulatory push
- Overall verdict: the system is resilient and well-capitalised, but RBI wants continued vigilance.
Exam angle
- Publisher: Reserve Bank of India; frequency: half-yearly.
- Likely question: main near-term risk to India’s financial stability (global geopolitical and trade uncertainty).