FSR is a biannual publication (June and December) by RBI that incorporates inputs from Financial Stability and Development Council (FSDC) subcommittee on current and emerging risks to the stability of Indian financial system.

Key Highlights of Report:

• Fiscal Health: Sovereign debt remains sustainable, supported by an S&P rating upgrade to 'BBB', favorable interest rate-growth differential and low level of foreign currency liabilities.
• AI Optimism: While markets are buoyed by Artificial Intelligence prospects, this optimism may mask underlying vulnerabilities and susceptibility to global spillovers.
• Fintech Risks: Lending in the fintech sector grew by 36.1%, but the RBI flagged concerns regarding elevated impairment among borrowers who have taken unsecured loans from five or more lenders.
• Stablecoins: The report warns that the widespread adoption of foreign-currency-denominated stablecoins could undermine India's monetary sovereignty, weaken policy transmission, and facilitate money laundering.
• Currency Performance: The Indian rupee experienced depreciation against the US dollar, influenced by falling terms of trade, higher tariffs compared to trading partners, and a slowdown in capital flows.
• Banking Health: Scheduled Commercial Banks (SCBs) maintain robust capital buffers; notably, the GNPA ratio declined to a multi-decadal low of 2.2% as of September 2025.