RBI Bulletin - Jul 23, 2025

JULY 2025 VOLUME LXXIX NUMBER 7Editorial Committee Indranil Bhattacharyya Anujit Mitra Rekha Misra Anupam Prakash Sunil Kumar Snehal Herwadkar Pankaj Kumar V. Dhanya Shweta Kumari Anirban Sanyal Sujata Kundu Editor Asish Thomas George The Reserve Bank of India Bulletin is issued monthly by the Department of Economic and Policy Research, Reserve Bank of India, under the direction of the Editorial Committee. The Central Board of the Bank is not responsible for interpretation and opinions expressed. In the case of signed articles, the responsibility is that of the author. © Reserve Bank of India 2025 All rights reserved. Reproduction is permitted provided an acknowledgment of the source is made. For subscription to Bulletin, please refer to Section ‘Recent Publications’ The Reserve Bank of India Bulletin can be accessed at https://bulletin.rbi.org.inCONTENTS Speeches Catalysing Sustainable and Green Infrastructure Financing for Achieving Net Zero Shri M. Rajeshwar Rao 1 Bridging the Credit Gap: The Evolution of India’s Credit Reporting Infrastructure Shri M. Rajeshwar Rao 7 Reflections from a Banker’s Journey Shri Swaminathan J. 13 Working Together, Growing Stronger: Responsible Governance for a Resilient UCB Sector Shri Swaminathan J. 17 Articles State of the Economy 21 Revisiting the Oil Price and Inflation Nexus in India 57 Determinants of Overnight Uncollateralised Money Market Volume - An Empirical Assessment 71 Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy 87 Current Statistics 107 Recent Publications 161 Supplement Financial Stability Report, June 2025SPEECHES Catalysing Sustainable and Green Infrastructure Financing for Achieving Net Zero Shri M. Rajeshwar Rao Bridging the Credit Gap: The Evolution of India’s Credit Reporting Infrastructure Shri M. Rajeshwar Rao Reflections from a Banker’s Journey Shri Swaminathan J. Working Together, Growing Stronger: Responsible Governance for a Resilient UCB Sector Shri Swaminathan J.Catalysing Sustainable and Green Infrastructure Financing for SPEECH Achieving Net Zero Catalysing Sustainable and taken together i.e., 2022 and 2023, was around $451 billion. Moreover Climate-induced disasters also Green Infrastructure Financing disproportionately affect the poorest nations and for Achieving Net Zero* communities. The scale of the impact of events arising out Shri M. Rajeshwar Rao of climate change therefore requires sizeable investments in technology and scale of finance Distinguished guests, participants, colleagues, to both build resilience and enable mitigation. As Ladies and Gentlemen, per OECD report2, the investment required for Let me at the outset thank the organisers green and sustainable infrastructure is estimated for having me here to share my thoughts on at around USD 3 to USD 5 trillion per year until this important topic. Climate risks and green 2050. This is not just a nominal allocation of capital infrastructure financing, as a catalyst for achieving resources - it would require a significant shift of net-zero emissions, has to move over time from the financial flows, complemented with appropriate margins of policymaking to the heart of global and policies, and reorientation of institutional priorities. national agenda and occasions such as these should The question is no longer about if but how to help in this endeavour. finance this transformation, which must then be Climate change is a phenomenon which we our collective resolve going forward. Financing are seeing and living through on a daily basis. sustainable and green infrastructure can no longer With each passing year, the extremes of weather remain a peripheral concern; it has to now become patterns are becoming more intense. Whether it is central to achieving both global and national net- extreme rainfall, droughts, heat waves or cyclones, zero targets, and for fulfilling the commitments of changes and aberrations have become the norm. the Paris Agreement. These aspects are important The incidents of formation of heat dome over USA for climate risk mitigation and facilitating a just or the monsoon rains hitting Mumbai before the transition. While more than 140 countries over the scheduled onset reflect recent examples of the world have made commitments to net-zero targets— climate change. The probability of changing weather the real challenge lies in their achievement. Climate patterns is going to be more regular and its economic finance remains significantly off-track, fragmented, impact very severe in the times to come. A recent overly reliant on public funds and often inaccessible report1 on economic cost of extreme weather events to the developing countries that need it most. So, estimates that over a ten-year period from 2014 to the question before us is both urgent and clear: How 2023, economic cost associated with climate-related do we catalyse sustainable and green infrastructure extreme weather events amounted to $2 trillion. financing to deliver on the promise of net-zero? Let Notably, the estimated cost over the last two years me share a few thoughts on this. * Inaugural Address delivered by Shri M Rajeshwar Rao, Deputy Governor, 1 https://iccwbo.org/wp-content/uploads/sites/3/2024/11/2024-ICC- Reserve Bank of India at the Conference on Green Infrastructure Finance Oxera-The-economic-cost-of-extreme-weather-events.pdf on July 03 at College of Agriculture Banking, RBI, Pune in Collaboration with Swiss Agency for Development and Cooperation (SDC) India. Inputs 2 https://www.oecd.org/en/publications/financing-climate- provided by Sunil TS Nair and Saket Kumar are gratefully acknowledged. futures_9789264308114-en/full-report.html RBI Bulletin July 2025 1SPEECH Catalysing Sustainable and Green Infrastructure Financing for Achieving Net Zero Sustainable and Green Infrastructure – The need of Financing Sustainable and Green Infrastructure – the hour Issues and Challenges For, the current period marked by climate While discussing sustainable and green related volatility, limited resources and widening infrastructure, the first step is to establish a clear inequality, sustainable and green infrastructure is definition and reach a consensus on what qualifies likely to be a necessity. The infrastructure whether as green infrastructure. The green taxonomy plays in the form of power plants, highways, apartments, a critical role in this regard. The government has commercial buildings, or fuel pipelines, must be recently released the draft of the climate finance taken as steppingstones towards achieving the goal taxonomy for public consultation, which paves of net-zero in carbon emissions and not emerge as the way for much-needed uniform classification barriers in achieving these targets. According to a across the economy and financial system. The draft World Bank study3, every single dollar invested in taxonomy lays down four essential criteria viz. avoidance of Green House Gas (GHG) emissions, climate-resilient infrastructure can save up to four reduction of GHG emissions intensity, adaptation dollars in avoided losses. Green and Sustainable solutions that reduce the risk of adverse impacts of infrastructure not only improves the quality of life climate change and research and development, for through cleaner air, accessible mobility, and more classification related to climate finance. But the key efficient public services, while remaining climate to enable sustainable and green infrastructure is friendly, it also helps in reducing vulnerability and technology. New technologies can lead to reduction inequality, particularly in communities that are in emission intensities, increase energy efficiency, prone to climate risks. Creation of climate resilient provide alternate energy sources to help avoid GHG infrastructure reduces disaster risks and prevents emissions, and build innovative solutions to drive catastrophic losses from floods, cyclones, and adaptation and resilience towards mitigating the heatwaves. It also reduces the volatility of losses that perils of climate change. may occur on corporate balance sheets in the face of physical climate risks, thereby help in improving This dependence on technology is however financial stability. While the arguments for climate both the enabler as well as the main constraint on resilient infrastructure are compelling, the hurdles the flow of finance. Let me elaborate a bit. Finance are many. It has been estimated4 that less than 1.5% always follows the principle of risk and reward. of total assets under management (AUM) of global Financial institutions adopt risk-based pricing for investment funds are aligned with Paris goals. Green financial products, considering both the borrower’s infrastructure pipelines in emerging markets remain risk profile and the inherent risks associated with the underdeveloped and the climate finance gap which is proposal. The technologies underlying sustainable estimated at over $2.5 trillion annually5, is widening. and green infrastructure are still evolving and are therefore less reliable regarding their future viability 3 https://www.worldbank.org/en/news/press-release/2019/06/19/42- as compared to the traditional technologies, which trillion-can-be-saved-by-investing-in-more-resilient-infrastructure-new- are comparatively stable and have stood the test world-bank-report-finds#:~:text=WASHINGTON%2C%20June%20 19%2C%202019%20%E2%80%93,Reduction%20and%20Recovery%20 of time regarding cash flow generation. There may (GFDRR). also be lack of technical expertise and capacity 4 https://clarity.ai/research-and-insights/climate/only-1-5-of-global- investment-funds-are-aligned-with-a-1-5oc-scenario-and-none-are-aligned- among the creditors in understanding these evolving when-scope-3-is-considered/ 5 https://www.un.org/en/climatechange/raising-ambition/climate-finance technologies. Hence, compared to traditional 2 RBI Bulletin July 2025Catalysing Sustainable and Green Infrastructure Financing for SPEECH Achieving Net Zero technologies, there are higher perceived inherent of financial modelling and risk estimations. This risks related to sustainable and green infrastructure creates a gap between these two input streams and technologies which then get reflected in their risk that challenges us in accurately estimating the risks pricing. Sustainable and green projects thus often face associated with sustainable and green infrastructure higher upfront costs including capex requirements. finance. The availability of climate related data The perceived risks associated with sustainable and with proper understanding about its sources and green infrastructure limit access to debt financing for methodology of its estimation is essential for early-stage technologies, highlighting the need for financial analysts to aid their decision making. greater equity investment (First Loss Default Capital). Since sustainable and green infrastructure Other constraints relate to longer payback periods technologies contribute to the reduction or avoidance creating asset-liability mismatches, information of greenhouse gas emission intensity, a critical gaps, lack of robust assurance and verification consideration for financing entities is to address the functions, which limit understanding and appraisal risks of green washing. For a creditor to fund any of these technologies to prepare investment-grade project which is intended to achieve reductions in infrastructure projects i.e., those with well-defined GHG emissions, there is a need to clearly understand cash flows, clear governance, and measurable impact how these projected reductions are being quantified. metrics. It would also require a robust and independent Climate change risks directly impact the Monitoring, Reporting, and Verification (MRV) real economy, and the financial sector in turn function. Standardised processes and databases gets impacted on account of its credit exposure to inform and quantify such benefits would be to the real economy. For the financial sector necessary to increase the funding avenues for such to perform a comprehensive risk assessment, infrastructure projects. relevant information flow from the real economy There are several building blocks or ecosystem i.e. corporate/institutional borrowers in a timely enablers which are required to be fostered and manner is important. Given that climate change and promoted to remove the bottlenecks surrounding climate risks is likely to impact a business segment sustainable and green infrastructure projects. consisting largely of MSMEs, unorganised sectors Without innovative financial instruments to and un-listed corporates, creating an awareness and mitigate early-stage risks, lack of availability of understanding amongst these borrowers on climate avenues for blended finance, many projects lack change risks and obtaining the required information the scale or bankability needed to attract private becomes important. capital. These limitations are further exacerbated in Understanding climate change is an elaborate case of emerging market economies as inadequate process involving the use of complex models to financial instruments, and fragmented institutional analyse the weather and climate patterns to predict coordination are critical constraints that are further the changes. Along with historical data, projections of exacerbated by poor sovereign ratings which leads climate variables such as rainfall, and temperature, to further increase in risk premium particularly are also inputs for forward looking risk estimations. when trying to access global funds. Global funding, However, the financial system or financial analysts where available, is predominantly denominated in have limited exposure to climate science. At the same foreign currencies, exposing borrowers to exchange time climate scientists have limited understanding rate risks and consequently increasing the cost of RBI Bulletin July 2025 3SPEECH Catalysing Sustainable and Green Infrastructure Financing for Achieving Net Zero financing - despite their need to access low-cost The exogenous enablers would involve funds. Moreover, globally climate finance availability mechanisms that can be built to cater to the is spread across several funds which have different innate risks associated with green and sustainable infrastructure, which is requirement of risk capital, application procedures, eligibility criteria, and first loss default capital, concessional funding, reporting standards, which makes it onerous and quantum of funding, global funding, public and time consuming for ensuring flow of such funding. private capital mobilisation. Blended finance, which These factors lead to institutional paradox with combines concessional public finance with private capital seeking sustainability, while sustainable capital, is essential for bridging the bankability gap assets seeking capital are unable to scale up and of green and sustainable infrastructure. There is access these funds. a need for an adequate mix of public and private Catalysing the finance to Sustainable and Green funding where the public funds crowds in the private infrastructure funds through appropriate incentive structure. Specific mechanisms need to be enabled wherein Given the issues and challenges, our focus global funds scale their mandates from project- should be on identifying effective ways to level support to market-shaping interventions, also mobilise the financing required to transform targeting underdeveloped sectors like adaptation our infrastructure landscape toward green and infrastructure, and nature-based solutions. There sustainable development. Let me float a few ideas is also requirement for Multilateral Development for you to ponder on. To unlock the required flows Banks (MDBs), Development Financial Institutions into green and sustainable infrastructure, we need a (DFIs), National Development Banks (NDBs) and holistic reconfiguration of the financial ecosystem - Vertical Climate and Environmental Funds (VCEFs) to one that rewires risk, institutionalises sustainability, harmonise approach and operations and enable joint funding to enable shift from being direct lenders to and aligns incentives. We need to follow a building catalytic partners and bring in economies of scale block approach whereby the ecosystem enablers are in sustainable and green infrastructure projects first put in place, thereafter harmonised and made financing. Instruments like first loss guarantees, consistent across all the sectors. We could categorise and subordinated debt, which can de-risk early-stage these enablers in two categories as endogenous and investments and crowd in institutional capital are exogenous enablers. The endogenous enablers refer also required. to the requirements of information flow, data gap Scalability of finance towards any cause comes bridging, MRV requirements, and building up of either from policy nudges or market mechanisms technical expertise. They can then act as the lynchpin that adequately incentivises risk taking. Once between the availability and requirement of credit the endogenous enablers are in place, supported flow and cover the entire ecosystem right from the by exogenous enablers, innovative financial appraisal to disbursement and monitoring of finance instruments such as sustainability linked loans, related to sustainable and green infrastructure transition finance instruments, green debt securities projects. These enablers will prepare the financial etc., can get the required traction for enabling the system to cater to the financing needs and facilitate flow of finance. Digital solutions are changing the the flow of funds with greater certainty. way traditional finance works and that innovation 4 RBI Bulletin July 2025Catalysing Sustainable and Green Infrastructure Financing for SPEECH Achieving Net Zero needs to be channelised to the cause of sustainable finance to overall market development with policy and green infrastructure. Digital tools to automate reforms, development of a project pipeline, and MRV requirements, and data and information flows, consistent regulatory frameworks, creating systemic can bring down compliance costs substantially. I conditions for fostering sustainable and green would request all the tech enthusiasts to innovate infrastructure finance. The international financial and bring in solutions in this regard. To foster tech- architecture also needs to be reoriented toward based innovation in finance, RBI has instituted a sustainability. The de-risking of sustainable and green regulatory sandbox wherein innovative solutions infrastructure can work best when national, local, can be tested to provide market wide scalable and multilateral institutions co-invest, signalling solutions. RBI has also allowed ‘Theme Neutral’ policy credibility and technical robustness. MDBs applications as part of the ‘On Tap’ facility under and global climate funds may need to revisit their the regulatory sandbox under which application governance structure to reflect the voice of recipient containing any technology / theme can be made countries, particularly the global south and not just under various topics including sustainable finance donor countries. Innovative financial instruments and climate risk mitigation. Tokenization may soon such as debt-for-climate swaps and climate-resilient enable fractional investment in infrastructure, debt clauses must also be scaled up to create fiscal opening new liquidity channels and investor bases. space for green investments. We all need to work This approach needs to be explored for sustainable towards the creation of a reformed, empowered, and and green infrastructure. Fintech, blockchain, and climate-aligned multilateral financial system. AI have the power to streamline project verification, Conclusion – Financial Leadership - Call to Action improve traceability, and democratise access to green The transition to net-zero is not just about and sustainable finance. We must capitalise on finance, but also about knowledge, trust, and these efforts to establish an infrastructure pipeline solidarity. We are at the crossroads or in climate terms of sustainable and green projects, a repository of nearing a tipping point. This is a moment not only vetted, investment-ready projects across sectors and for climate policy, but for the financial leadership to regions. We must also empower local governments, act together. A sustainable and green infrastructure indigenous communities, and civil society to lead is the best legacy we can pass on to the future climate infrastructure efforts. This may include generations. As finance professionals and leaders, decentralised renewable energy systems, sustainable we need to act in unison to foster endogenous and land use practices, and community-based adaptation exogenous enablers and build a robust ecosystem projects. to scale climate finance to catalyse green and No country can achieve net-zero in isolation. sustainable infrastructure in a prudent manner. We Climate change is the quintessential global challenge need to align our mandates and approaches with the and so too our response. There is a requirement of country’s net-zero pathways, innovate and strategise enhanced global cooperation in this regard which and collaborate globally, even as we may act locally. must also extend to technology transfer, R&D funding, The Reserve Bank of India has been proactive in its and skills development to enable development of resolve to facilitate creation of a robust ecosystem technical expertise to identify, design, and structure wherein the assessment and mitigation of climate bankable sustainable and green infrastructure change risks are fostered and its impact on the projects. The focus needs to shift from project-based economy and financial system is curtailed. In this RBI Bulletin July 2025 5SPEECH Catalysing Sustainable and Green Infrastructure Financing for Achieving Net Zero context, we have followed a building block approach, foundation of climate action, economic resilience, focused on wide stakeholder consultation, capacity and social justice. It is a significant lever for us to development, channelising flow of credit towards achieve net-zero targets, protect our communities, green finance, efforts to bridge limitations such as and create a more equitable world. The future has climate data gaps and modelling challenges, and been built and will continue to be built, one way or building a conducive regulatory framework for risk another. The question is: will it be sustainable? And what can we do to ensure it? assessment balancing compliance and conduct. Let me leave you with these thoughts and wish We need bold and urgent action to finance the you all successful deliberations and fruitful outcomes future requirements. There is a need to catalyse during these meetings. the capital that helps to build the world we need. Sustainable and green infrastructure is the Thank you. 6 RBI Bulletin July 2025Bridging the Credit Gap: The Evolution of India’s Credit SPEECH Reporting Infrastructure Bridging the Credit Gap: The (CIBIL) was thereafter incorporated in 2000, and over the years, three other Credit Information Companies Evolution of India’s Credit (CICs) have also started their operations in India. Reporting Infrastructure* A variety of challenges had hindered wider acceptance of credit information companies over the Shri M. Rajeshwar Rao years. The key obstacles included inconsistent quality in data submitted by lenders and shortcomings Ladies and gentlemen, Good Morning. in consumer protection mechanisms. Therefore, At the outset, let me thank the organisers for a committee was set up in 2013, to examine the inviting me to deliver the keynote address at this issues hampering the sector and based on its milestone event and congratulate Trans Union CIBIL recommendations, significant policy changes were (TU CIBIL) on its 25th anniversary. Credit reporting made in 20141. These included standardisation of and TU CIBIL have grown together in India and the data formats for individual, corporate and micro company has made a significant contribution in finance borrower segments, institutionalizing the expanding the footprint of credit reporting in the mechanism of Technical Working Group comprising country. Credit reporting systems today operate as of representatives from various regulated entities a key element in the national financial architecture, and introduction of Data Quality Index for improving encouraging greater credit access, supporting data quality. financial inclusion, enabling effective supervision, In the recent past, our focus has been on taking and enhancing financial stability. This silver jubilee regulatory measures to improve quality of data and therefore also represents a significant milestone in ensure faster redressal of customer grievances. TU CIBIL’s ongoing contribution to strengthening this Several policy measures have been taken to reduce framework. This also gives us an occasion to reflect information asymmetry, enhance data quality and on how the information gap between the credit improve customer satisfaction. Just to illustrate, institutions and the borrowers has been addressed these steps included mandating availability of free over time and the possible way ahead. full credit report (FFCR) to individuals, appointment of internal ombudsman by CICs, extending the Evolution of Credit Information Companies in India Reserve Bank’s Integrated Ombudsman Scheme To set a context to the theme of this speech, it to CICs, introduction of a framework for granting may be worthwhile to reflect briefly on the evolution compensation to customers for delayed rectification of credit information companies in India. The Reserve of their credit information and increasing frequency Bank had recognised the need for establishing a of credit reporting. RBI directions have also mandated Credit Information Bureau for collection of credit the CICs to display the list of suit-filed accounts of information from lending institutions and for large defaulters and wilful defaulters on their website. the provision of such information to the financial The role of data and emerging technology in system and had set up a Working Group in 1999 for enabling credit access is therefore extremely topical the purpose. Credit Information Bureau (India) Ltd. and relevant at this juncture. But if we were to go * Keynote Address delivered by Shri M Rajeshwar Rao, Deputy Governor, Reserve Bank of India on July 01, 2025, at TransUnion CIBIL’s Credit 1 Report of the Committee to Recommend Data Format for Furnishing Conference in Mumbai. Inputs provided by Jyoti Prakash Sharma, Rituraj of Credit Information to Credit Information Companies 2014, under the and Tarique Ansari are gratefully acknowledged. chairmanship of Shri Aditya Puri. RBI Bulletin July 2025 7SPEECH Bridging the Credit Gap: The Evolution of India’s Credit Reporting Infrastructure back in time, 25 years back, lack of information a complete registry containing security interest of and high cost of access to information hindered immovable, movable, intangible properties and access to credit to large segment of the populace, assignment of receivables. By providing access to the financially excluded. It was in this scenario that all kinds of creditors and the facility for filing of credit reporting started to take root in the country, attachment orders and court orders, CERSAI delivers and we have traversed a long road since then. Apart a comprehensive status of any encumbered / attached from greater access to secured lending, the creditors property.2 The Central Repository of Information gain confidence to underwrite unsecured loans, on Large Credits (CRILC), was set up in 2013 by facilitated by access to credit information provided the Reserve Bank to collect, store and disseminate by the CICs as this reduces the information gap that information on large credits of scheduled commercial existed earlier between even the prime borrowers banks, all India financial institutions and certain and the lenders. non-banking financial companies. These initiatives have undoubtedly helped banks and other financial While CICs have undoubtedly played an important institutions in improving their credit administration role in reducing the information asymmetry thereby besides providing vital inputs for supervisory risk facilitating better credit decisions, they are not going assessment on build-up of credit risk in the financial to be the only game in town to source the required system. data, as information asymmetries are also sought to be addressed through other complementary Digital Public Infrastructure (DPI) mechanisms. This trend is driven by the digitalization At the heart of the FinTech revolution in India of financial services and electronification of records is India’s Digital Public Infrastructure (DPI) — a which has created a large repository of data which framework that integrates technology, markets, and can be used to get better handle on economic trends, governance to serve public interest. The DPI includes both micro and macro. This coupled with the growth Unified Payments Interface (UPI) which is the flagship of FinTechs and innovations in financial services, has instant mobile digital payments system, interoperable created business opportunities to harness alternate across any bank account or app, Aadhaar Digital ID for data sets in order to gain a better understanding over a billion adults, Aadhaar Payment Bridge which of financial behaviour and credit worthiness of facilitates cash transfers directly to beneficiaries’ bank individuals and entities. These insights can give a accounts, Aadhaar Enabled Payments System (AEPS) richer perspective than conventional analysis and which is an interoperable network of biometric based provide an impetus to the measures taken to foster cash withdrawal & deposits, DigiLocker which is an greater financial inclusion. Let me highlight a few of e-Locker for storing verifiable credentials, Bharat Bill these developments, technology led, and regulator Payments System, now called Bharat Connect for bill supported. fetch & pay, and FastTag - a near field communication CERSAI and CRILC based toll charges and parking collections platform. This is supplemented by the Account Aggregator In 2011, the Central Registry of Securitisation Framework, another cog in the DPI, which is a cross- Asset Reconstruction and Security Interest of India sectoral framework for consented financial data (CERSAI) was incorporated, initially for operating sharing. Apart from facilitating credit delivery, this is a registration process under the provisions of SARFAESI Act. Over the years, it has developed into 2 https://www.cersai.org.in/CERSAI/aboutus.prg 8 RBI Bulletin July 2025Bridging the Credit Gap: The Evolution of India’s Credit SPEECH Reporting Infrastructure an initiative towards open finance. It has now come through an increase in average indebtedness3. Despite a long way and is growing rapidly with onboarding some moderation observed recently, the growth in of financial institutions, since guidelines were first deployment of bank credit under ‘retail/personal issued in 2016. The inclusion of Goods and Services loan’ category witnessed a CAGR of approximately 17 Tax Network (GSTN) as a financial information percentage over the past five years.4 Moreover, the provider under the account aggregator framework is composite Financial Inclusion (FI) - Index to measure expected to give further impetus to cashflow based and evaluate the extent of financial inclusion too has lending to MSMEs. improved substantially from 49.9 in 2019 to 64.2 in in 2024 indicating progress in deepening of financial Unified Lending Interface (ULI) inclusion in the country5. This reflects two important The latest addition in the Digital Public facets of credit that need to be borne in mind. First, Infrastructure for credit is the Unified Lending the availability of credit to individual borrowers has Interface (ULI), designed to simplify and democratize improved and second the improvement in the FI- credit access by offering lenders regulated, seamless Index reflects reduced frictions in credit delivery access to verified borrower data. The convergence with consequential improvement in financial access. of Jan Dhan Accounts, Aadhar and Mobile Phones, popularly known as the JAM trinity, UPI and ULI, Digital initiatives for MSME sector represents a significant advancement in India’s A targeted beneficiary of increased use of digital lending infrastructure. One of ULI’s standout data and technology in credit decisions should be features is its ability to tap into alternative digital the MSME sector, which remains the backbone of data, enabling access to credit even for those India’s economy. With over 7.34 crore enterprises, without formal financial histories. Its integration contributing nearly one-third of our GDP and 46% of with NABARD’s e-KCC portal is expected to extend exports, this sector is key to our economic future6. access to customers of District Central Co-operative Increasing the availability of credit to the MSMEs has and Regional Rural Banks, previously excluded from been a policy priority of the Reserve Bank and the formal digital channels. Integration of state-level Government of India. However, MSMEs have faced digitized data, such as land records and cooperative several challenges in accessing formal credit such databases into the ULI framework, would provide as information asymmetry, excess documentation novel cash flow-based lending solutions. Going and lack of transparency. Here the role of CICs has forward, the potential for ULI to also harness data become important. When commercial credit reporting from e-commerce platforms and gig economy apps is efficient, creditors need to rely less on relationship could open new doors for credit inclusion for small lending and soft information, and more on facts and sellers, delivery workers, and freelancers. fact-based analyses based on credit reports and other Improved access to credit credit reporting products. When we evaluate the outcomes of these 3 Financial Stability Report, December 2024 – Reserve Bank of India. measures, we can see the significant changes and 4 Deployment of Bank Credit by Major Sectors – Database on Indian benefits. Over the years, India’s household debt as a Economy; personal loans include consumer durables loan, housing loan, advances against FDs/shares/bonds/, credit card, education loan, vehicle percentage of GDP has increased and stands at ~43 loan, loans against gold and other personal loans. 5 Annual Report 2025 – Reserve Bank of India. percent in 2024. This rising trend is fuelled more by an 6 Understanding Indian MSME Sector – Progress and Challenges, May expansion in the number of borrowers rather than just 2025 – Small Industries Development Bank of India (SIDBI). RBI Bulletin July 2025 9SPEECH Bridging the Credit Gap: The Evolution of India’s Credit Reporting Infrastructure Rise of FinTech Ecosystem Central Bank Digital Currency (CBDC) for credit disbursement It needs to be recognised that of late FinTech players have emerged as powerful enablers, The proposed use of programmable CBDC for transforming how credit reaches previously unserved credit disbursement is another pioneering initiative. and underserved populations. By leveraging the One commercial bank’s pilot for tenant farmer lending power of technology, they have significantly lowered under Kisan Credit Cards, where programmable the cost and complexity of delivering financial CBDC ensures end-use monitoring, looks promising. services to the last mile. This has not only improved Even without land records, tenant farmers are being user experience but also addressed persistent extended formal credit, based on livelihood activity challenges that had kept many outside the formal tracking. If successful, this model could be replicated credit fold. Importantly, we are seeing a growing for collateral-free loans to micro-enterprises, street collaboration between FinTechs and traditional vendors, and artisans, where end-use assurance financial institutions. This partnership is particularly allows for responsible, productive lending. The digital impactful in credit origination and supply chain nature of such disbursements also creates valuable finance, where it bridges gaps created by physical digital footprints, which can enable further lending infrastructure and human resource constraints in and reduce dependence on government schemes. remote and rural areas. For example, in FY 2024, Leveraging Tokenisation for Credit Delivery FinTechs have processed approximately 47% of small Tokenisation i.e. generating and recording a ticket personal loans of less than 1 lakh, by count.7 digital representation of financial or real assets Open Credit Enablement Network and Open on a programmable platform could be an option Network for Digital Commerce that can offer enhanced efficiency, transparency The Open Credit Enablement Network (OCEN) and accessibility, and may be seen as the next step that facilitates interactions among lenders, borrowers, following dematerialisation and digitalisation. It and loan service providers, effectively uniting all could favour small and medium enterprises’ (SMEs’) participants within the credit ecosystem on a common access to credit by narrowing the information gap. platform to streamline credit delivery, is also poised Further, SMEs could improve their collateral offering to be a significant part of the fintech landscape. It is by tokenising real assets or trade receivables, thus expected to enable lenders to make more informed improving their standing in the credit markets9. credit decisions by utilizing alternative data sources, Tokenisation may also enable simultaneous asset such as cash flow information. Going forward, there transfer and payment in a financial transaction, is a promising scope for deeper integration between minimizing counterparty risk and thereby OCEN and the Open Network for Digital Commerce considerably reducing the need for collateral. (ONDC). Such interoperability could democratise Role of AI/ ML in facilitating credit delivery credit access further and open new avenues for One of the main challenges in the provision MSMEs to participate in digital commerce, fostering of credit facility, especially among underprivileged broader economic growth on multiple fronts.8 populations, is the absence of credit history. By 7 Small is BIG - How Fintechs are Revolutionising Lending, 2024 – Experian. 9 Leveraging tokenisation for payments and financial transactions, April 8 https://www.dbs.com/india/newsroom_media/how-ocen-can- 2025 - Consultative Group on Innovation and the Digital Economy, Bank revolutionise-in-indias-msme-lending-ecosystem.page for International Settlements. 10 RBI Bulletin July 2025Bridging the Credit Gap: The Evolution of India’s Credit SPEECH Reporting Infrastructure using artificial intelligence (AI) and machine learning ensuring financial system integrity. With a view to (ML), algorithms can evaluate alternative data from put in place a regulatory framework for FinTechs diverse sources to determine creditworthiness more that maintains a balance between maximising their accurately. In fact, it seems that time is not far when creative potential while minimising the idiosyncratic alternative data will no longer be alternate, but it risks they pose to the financial system; the Reserve will be the mainstream. This advancement would Bank issued a Framework for Self-Regulatory allow lenders to extend credit to individuals who Organisation(s) in the FinTech Sector in 2024. The were once deemed ineligible. Use of AI/ML could Reserve Bank Innovation hub, a wholly owned simplify the disbursement process by automating subsidiary of RBI, commenced an initiative to foster credit assessments and risk evaluations, which not a vibrant infrastructure for facilitating the progress only accelerates fund distribution but also cuts of FinTechs in the country. The initiative - Fintech administrative costs, making it practical to offer small and Startup Acceleration (FAST) - aims to connect loans even in remote regions. Moreover, AI models the stakeholders, viz., the startups, incubators, excel at uncovering previously hidden insights in accelerators, investors, regulators and banks and data, enabling financial institutions to more precisely financial institutions to accelerate innovation and forecast their clients’ funding requirements and financial inclusion. Through the HaRBInger initiative, creditworthiness. They also streamline compliance Reserve Bank is encouraging the global innovation workflows, such as Know Your Customer (KYC) community to solve real-world problems with a procedures, which significantly cuts operational costs special focus on inclusive design and accessibility and increases their speed of lending. Microfinance for differently abled persons in the digital finance and microloans which serve as crucial support journey. To foster continuous innovation, we have systems for underserved communities are likely to made the Regulatory Sandbox ‘on tap’ and ‘theme- be the biggest beneficiary of this advancement. neutral’. Grameen Credit Score Even as we embrace these sweeping changes, we must remain cognizant of the need for addressing Another initiative that is on the anvil is the issues around data accuracy, data security, and model Grameen Credit Score. This score will be in addition risk. These could present significant challenges in to the existing credit score and will be specifically the effective deployment of data-driven systems. designed to enhance financial inclusion in rural Inaccurate or incomplete data can undermine the areas, particularly for members of self-help groups reliability of analytical outputs and decision-making (SHGs). It aims to address the limitations of existing processes, while poor data security can expose generic credit scoring systems by creating a tailored organizations to breaches, resulting in legal liabilities framework for assessing the creditworthiness of rural borrowers. This measure can improve access to and reputational damage. Additionally, the use of formal credit for rural populations, including farmers complex AI and machine learning models introduces and marginalized communities. concerns around model risk, especially when these models are not thoroughly tested, validated, or Role played by the Reserve Bank monitored for biases and performance drifts. Rigorous In this dynamically evolving scenario, the Reserve validation protocols, continuous monitoring, and Bank has been endeavouring to create an enabling robust governance frameworks are essential to ensure regulatory environment for fostering innovation and that these models remain fair, transparent, and RBI Bulletin July 2025 11SPEECH Bridging the Credit Gap: The Evolution of India’s Credit Reporting Infrastructure aligned with regulatory and ethical standards. While submitted by CIs. Another key challenge is identity we should be willing to embrace new technologies standardization. CICs rely on credit institutions to and modern regulatory approaches, the core values provide accurate and validated IDs. Without this, - integrity, transparency, and commitment to public duplication and misreporting remain risks. We must service - should drive our innovation and initiatives move towards a unique borrower identifier, which is towards financial inclusion. Innovation needs to be secure, verifiable, and consistent across the system. responsible and accountable. It should not be at the We stand on the cusp of a transformative cost of an individual’s rights regarding the use of financial era where technology, policy, and innovation their personal data. converge to democratise credit access. Various Looking ahead initiatives, collaborative partnerships and sustained regulatory support are laying the foundation for a The path ahead is filled with opportunity and more inclusive, resilient, and sustainable economy. responsibility. For the CICs let me outline two critical But at the heart of a sustainable credit landscape lies enablers i.e. (i) Enhancing Data Freshness and (ii) an empowered consumer which is enabled when we Improving Data Quality. Currently, credit data is have a financially aware and literate customer. While refreshed on a fortnightly basis. We must aspire to regulations mandate transparency and awareness, more frequent updates. Real-time or near-real-time the responsibility needs to be fulfilled by all of us. credit reporting will improve underwriting precision, Financial literacy cannot be achieved through a one- enable timely reflection of borrower actions like time campaign; it has to be a sustained commitment loan closures or repayments and deliver a superior for all the institutions and entities involved. While consumer experience. This shift requires investments the institutions in the financial system have done in technology, process reengineering, and change commendable work, the journey is far from complete. management. But the rewards - transparency, The setting up of Credit Information Companies efficiency, and trust, far outweigh the costs. Similarly, was in one sense the starting point of this journey data quality is the bedrock of responsible lending and of financial inclusion and democratisation of credit. Reserve Bank has always emphasised the importance Even as the journey continues, the role of the CICs of accuracy in regulatory submissions. It has been remains integral and important in realizing the vision prescribed that CICs shall provide a data quality index of Total Financial Inclusion. score to the Credit Institutions (CIs) on a monthly basis to facilitate improvement in the quality of data Thank You. 12 RBI Bulletin July 2025Reflections from a Banker’s Journey SPEECH Reflections from a Banker’s embark on your journey into the world of banking and finance. Journey* You will soon dive deep into subjects like Shri Swaminathan J. Banking Law and Practice. One of the things you will notice is that banking, unlike many other industries, Principal, NIBM, Dr Partha Ray, Members of does not operate solely on the strength of laws and Faculty, my colleagues from the Reserve Bank of regulations. A significant part of what holds the India, and most importantly, our promising future system together are the conventions and practices bankers from the PGDM Batch of 2025-27. A very established by bankers themselves—what we refer good evening to all of you. to as Banking Practice. It is a privilege to be here at the National For instance, consider something as familiar as Institute of Bank Management—an institution that crossing a cheque with “Account Payee”. There is stands as a pillar of excellence in banking education, no specific statute mandating it—but it is a time- research, and leadership development ever since honoured convention that enhances safety and its founding by the Reserve Bank of India in 1969. limits misuse. These practices, developed over NIBM has indeed contributed immensely to building time through experience and prudence, carry the intellectual capacity and strategic vision in the weight of law in many contexts. They represent the sector. This beautiful campus in Pune is not just professionalism, caution, and trust that underpin picturesque—it is a crucible where ideas are forged, banking at its best. careers are shaped, and the future of Indian banking And so, while your curriculum will cover is quietly nurtured. frameworks, policies, and tools, what will truly shape I would like to thank Dr. Ray and the entire you as a banker is your ability to blend knowledge faculty for inviting me to be part of this significant with judgment, law with convention, and theory milestone in your journey—the beginning of a with practice. two-year programme that, I am confident, will It is in that spirit that I would like to share four challenge you, shape you, and prepare you for the simple reflections—each in the form of a metaphor responsibilities ahead. or analogy—which I hope will serve you well as you Reflections from the Journey begin your own journey. These are: The Lemon, The Lookout, The Deer, and The King. Over the course of my career, I have been fortunate to experience the best of two remarkable The Lemon institutions—the scale and grassroots connect of You’ve all heard the phrase: “When life gives you the State Bank of India, and the intellectual depth lemons, make lemonade.” I’d like to take it a step and policy perspective of the Reserve Bank of India. further: “Life will give you lemons—so be prepared Along the way, I have gathered a few lessons—some to make lemonade, lemon pickle, lemon cake… from success, and many more from challenges—that whatever the situation calls for.” I believe may resonate with you, especially as you Let me tell you about one of my own “lemons”. * Valedictory Speech by, Deputy Governor at the National Institute of Bank Management (NIBM), Pune on July 12, 2025. After completing my two years of probation at SBI, I RBI Bulletin July 2025 13SPEECH Reflections from a Banker’s Journey had hoped to be posted in Bangalore—a city where I because it wasn’t seen in time. The ship was moving had trained. Instead, I found myself in Hubli, some too fast, and there wasn’t enough time or flexibility 400 kms north of Bangalore, assigned to the Data to change course. Processing Centre of the Bank as a Programmer—a The lesson is clear. In banking—as in life—it is role I had no background of. Computers in the banks not always the biggest or most advanced systems that were still in their infancy. It was a complete surprise. succeed. It is the ones that stay alert, that course- When I reported, the Personnel Officer told correct early, and that respect the value of foresight. me something profound: “We don’t need computer As future bankers, you must develop the experts who can learn banking—we need bankers mindset of a lookout. Banking today is more complex who can learn computers.” That perspective changed than ever. While digital transformation has brought everything. speed and convenience, it has also created new It was tough. I had to learn from scratch. But vulnerabilities—cyber threats, phishing, synthetic with inputs from institutional training, support identities, deepfakes, and third-party risks. from colleagues and a willingness to adapt, I was As transactions become real-time and frictionless, soon contributing to transforming how the Bank the time it takes for damage to occur—and spread— collected and processed its data for feeding into has drastically shortened. Vigilance is no longer regulatory reporting and executive decision-making systems. optional; it is an essential and core professional skill. The broader point is this: life—and your career—will not go exactly as planned. You may not Yes, banks need strong systems and protocols. get the role or the location you desire. But the ability But they also need alert professionals who scan the to adapt, to embrace the unfamiliar, and to turn environment, anticipate risks, and speak up early. unexpected situations into learning experiences is You must be that lookout—always asking: What is what will set you apart. on the horizon? What could go wrong? What needs attention before it’s too late? So, yes—life will hand you lemons. Don’t just make lemonade. Learn to enjoy the process of Innovation and speed are vital. But so are learning how. situational awareness, caution, judgment, and the courage to act. Be the one who notices the iceberg The Lookout early—not the one explaining the damage afterward. On a ship, lookouts are stationed to watch for obstacles, changing weather, and other vessels—long The Deer before the captain or crew becomes aware of them. Let us talk about agility—and endurance. Have Their job is simple but vital: spot trouble early and you ever wondered how a deer sometimes escapes a alert the team in time to act. cheetah—the fastest land animal on the planet? In One of the most well-known examples is the fact, a cheetah’s hunting success rate is only around sinking of the Titanic. Despite its size, sophistication, 50 per cent1. and engineering, the Titanic struck an iceberg it 1 “Do Cheetahs Always Catch Their Prey?” Kenya Wild Parks, 18 July 2024, couldn’t avoid—not because no one saw it, but www.kenyawildparks.com/do-cheetahs-always-catch-their-prey/ 14 RBI Bulletin July 2025Reflections from a Banker’s Journey SPEECH It is not because the deer runs faster. It is the King. I have deliberately saved this for the end, because it is more agile. While the cheetah is built because even if you forget everything else I have said for speed, the deer survives by turning sharply, today, I hope you will remember this. changing direction unpredictably, and using its “Customer is the King” is a phrase we hear surroundings wisely. This ability to adapt quickly— often. It is printed on posters, included in mission to change course in the face of danger—is often what statements, and used in marketing campaigns. But in saves it. banking, it is not just a slogan—it is our duty. But there is another crucial factor: endurance. Cheetahs are sprinters, not marathoners. They can The number of customer complaints—especially maintain top speed only for about 20 to 30 seconds through digital channels—has risen significantly before their bodies begin to overheat. If the prey can in recent years. From social engineering frauds to hold out just a few seconds longer—keep zig-zagging, poor grievance redressal, the loss and frustration stay hidden, or reach denser terrain—the cheetah is real. Often, the problem is not the product or must slow down or stop. Many hunts fail not because service— but, as I see it, the real issue is a lack of the cheetah is not fast enough, but because it cannot empathy. sustain the chase. We see increasing automation but decreasing And each failed sprint comes at a cost. It ownership. Systems respond with templated emails; consumes enormous energy and leaves the cheetah helplines loop back endlessly. This is not how trust physically drained, needing time to recover. Too is built, and certainly not how it can be sustained. many failed chases can lead to exhaustion—and even make the cheetah vulnerable When I was a young Field Officer in SBI, we took pride in truly knowing our customers. Nowadays, This, to me, is a profound lesson for all of us—especially those entering a dynamic, highly KYC is often reduced to a periodic ritual. Today’s demanding profession like banking. It is not enough banker must find a way to bring back that personal to be fast. You must be agile. But equally, you must awareness and responsibility—even in a digital know how to pace yourself. context. A good banker isn’t just quick to act—but also A senior citizen struggling with an ATM pin…A able to endure uncertainty, recover from setbacks, borrower in a rural area unsure how to repay and stay focused over the long run. You will face digitally… A small business owner worried about a moments of rapid change—crises, deadlines, audits, UPI refund… policy shifts—but you will also need the discipline They are not just service requests. They are and stamina to navigate slow, complex processes that unfold over months or years. moments of trust. Agility helps you dodge what’s in front of you. They all deserve your time, your patience, and Endurance helps you stay the course. You will need your professionalism. both. Technology will enable the transaction. But only The King you can build the relationship and only you can earn Finally, let me speak about what I believe is the the customer’s trust for your institution. Finally, that most important aspect of banking: the customer— is what will distinguish a banker from an app. RBI Bulletin July 2025 15SPEECH Reflections from a Banker’s Journey Closing Reflections Your decisions will impact individuals, families, businesses, and communities. You will play a role Over the next two years, you will be immersed in financial inclusion, digital adoption, credit in the principles and practices of modern banking— growth, and economic stability. That is no small credit, risk, compliance, technology, analytics, responsibility. So, remember to lead with character and more. NIBM will equip you with the tools. But and conviction. how you use them—with empathy, curiosity, and integrity—is what will define your journey. With this I wish you all the very best in your journey ahead. You are entering a profession that is not just about managing money—it is about managing trust. Thank you, Jai Hind. 16 RBI Bulletin July 2025Working Together, Growing Stronger: Responsible Governance SPEECH for a Resilient UCB Sector Working Together, Growing workers, and others in the informal sector. What sets UCBs apart is their deep-rooted presence in the Stronger: Responsible community and their ability to offer personalised, Governance for a Resilient responsive service, customers are at ease walking into their neighbourhood UCB branch. This reflects UCB Sector* the essence of the cooperative model - banking built on relationships, local knowledge, and grassroots Shri Swaminathan J. connection. Chairmen and Directors of Urban Cooperative With this unique identity as a cooperative bank, Banks; Shri Jaikish, Principal of the College of comes a substantive responsibility. While UCBs Agricultural Banking; my colleagues from the Reserve are rooted in cooperative values, they are banks Bank of India; ladies and gentlemen - a very good - licensed to accept public deposits and expected afternoon to all of you. to operate with the same prudence, integrity, and accountability that banking demands. Banking is I am honoured to be here today to address you built entirely on the trust of depositors. Trust must at the culmination of this seminar’s deliberations on be earned and protected every single day - through the theme ‘Resilient Cooperatives for the Future: sound governance, effective risk management, and Enhancing Governance in a Digital Age’. an unwavering commitment to depositors’ interests. This seminar, thoughtfully organised by the Recognising both the importance of UCBs and College of Agricultural Banking, comes at a very the challenges they face, the Government and the appropriate time. The United Nations has declared Reserve Bank have taken several steps in recent 2025 as the International Year of Cooperatives, with years to support the sector’s stability and growth. the theme ‘Cooperatives Build a Better World’, recognising the vital role cooperatives play in building Based on the recommendations of the Expert inclusive, fair, and resilient communities - something Committee chaired by former Deputy Governor, that India’s own cooperative movement has long Shri N. S. Vishwanathan, a four-tiered regulatory exemplified. framework was introduced to bring proportionality in regulation. The establishment of a sector-wide With a proud history of over a century, Umbrella Organisation was also facilitated to help cooperatives have become powerful engines of address issues of scale, particularly in technology grassroots development. From Amul and IFFCO to and capacity building. Recently, the priority sector SEWA and India Coffee House, India’s cooperatives lending guidelines for UCBs were revised in response have shown how collective effort can drive both to feedback from the sector. economic and social progress. While these measures reflect the commitment UCBs have long been an essential part of India’s of the Reserve Bank and the Government to support cooperative story, providing banking services to and strengthen the UCB sector, lasting progress segments - often underserved by larger banks - must ultimately come from within. Government and small traders, self-employed individuals, salaried regulators can enable, but it is the internal resolve * Valedictory Address by Shri Swaminathan J, Deputy Governor, Reserve and discipline of each institution that will determine Bank of India at the Seminar for Directors of Urban Co-operative Banks held in CAB, Pune on Friday, July 11, 2025. its long-term resilience. This calls for a renewed focus RBI Bulletin July 2025 17SPEECH Working Together, Growing Stronger: Responsible Governance for a Resilient UCB Sector on governance, professional management, and strong Building Robust Assurance Functions internal systems. It is therefore essential that you, as The second area I want to highlight is the Directors, take the lead in building institutions that importance of strong internal assurance functions are capable, forward-looking, compliant, and - most - namely, risk management, internal audit, and importantly - worthy of the trust placed in them. compliance. These are not back-office support roles. Let me now turn to five key areas where, as They are your eyes and ears within the organisation, Directors, your role is especially critical. These are helping you identify risks early, monitor controls, not merely regulatory expectations - they are the and ensure that operations align with regulatory essential building blocks of strong and sustainable expectations and internal policies. institutions. In each of these areas, your focused However, these functions can only be effective if attention and leadership can make a meaningful they are given the independence, stature, and access difference to the future of your banks. they require. They must have the freedom to escalate Strengthening Governance and Accountability concerns without fear. They must have the skills and seniority to command respect within the institution. My first area is on strengthening governance And most importantly, they must have a direct and accountability. Time and again, our supervisory line of communication with the Board - especially experience has shown that the root cause of distress with the Audit and Risk Management Committees in cooperative banks is not external shocks, but weak (especially for those UCBs, where we have mandated internal governance. Whether it is high levels of non- RMCs). performing assets, instances of fraud, or erosion of capital, the underlying issues often trace back to As Directors, you must engage actively with poor oversight, lack of independent judgement, and these functions - not just to review their reports, inadequate checks and balances at the Board level. but to understand what is happening at the ground level. Ask questions. Seek clarifications. Ensure that While you are not expected to manage the day- red flags are not ignored or rationalised. A well- to-day operations - that is the responsibility of senior functioning risk, audit, and compliance setup is the management - as Directors, your role is not to merely foundation of a safe, well-run bank. endorse decisions, but to actively engage, ask the difficult questions, and ensure that the bank is being Engaging Constructively with Auditors and run in a prudent, ethical, and transparent manner. Inspectors All dealings must be at arm’s length, and related- The third area I would like to emphasise is your party transactions must be approached with utmost engagement with statutory and internal auditors, caution and full transparency. This applies not only as also with supervisory teams. These stakeholders to lending decisions, but also to appointments and are not adversaries - they are valuable partners in other administrative matters - please follow a fair and safeguarding the health of your institution. transparent process without fail. Auditors play a crucial role in independently Strong governance begins with active, informed, validating the bank’s financial position and internal and independent Boards - Boards that place the long- controls. Their observations must not be treated term interests of the institution and its depositors as routine or transactional. Engage with them above all else. meaningfully. Understand the concerns they raise 18 RBI Bulletin July 2025Working Together, Growing Stronger: Responsible Governance SPEECH for a Resilient UCB Sector and ensure that necessary corrective action is taken - Digital transformation should not be about not just in form, but in spirit. ticking a box or keeping up with trends. It must be a strategic choice, aligned with your bank’s risk Likewise, the inspection reports issued by appetite, customer profile, and operational capacity. the Reserve Bank should be viewed as a tool for Above all, it must be anchored in a commitment to strengthening your bank - not as a fault-finding provide secure and uninterrupted service for your exercise. These inspections are a critical last line depositors. of defence, aimed at identifying risks before they become unmanageable. Supporting Collective Strength through the Umbrella Organisation As Directors, it is essential that you read these reports carefully, discuss them thoroughly at the fifth area I want to highlight is the importance of Board level, and ensure time-bound action on the collective action - and the opportunity that now lies issues flagged. Avoid the temptation to look for before the sector through the Umbrella Organisation. comfort in favourable metrics alone. Instead, focus In today’s environment, the challenge of limited on understanding the root causes of any weaknesses scale has become more pressing for UCBs - particularly and most importantly, in fixing them decisively. in areas such as technology adoption, cybersecurity, Embracing Technology with Responsibility risk management, and compliance. As banking becomes more technology-intensive and regulatory The fourth area I want to highlight is the growing expectations rise, the cost of staying competitive importance of technology - and the need to adopt it and secure is increasing. For many individual UCBs, with foresight and responsibility. making the necessary investments while maintaining In recent years, customer expectations have profitability is becoming increasingly difficult. The changed dramatically. Digital payments, mobile creation of the National Urban Cooperative Finance banking, and round-the-clock service are no longer and Development Corporation Ltd. (NUCFDC) - as luxuries - they are now basic expectations. an Umbrella Organisation - was a response to this evolving challenge. Many UCBs are eager to offer internet and mobile banking, and that is a welcome aspiration. The Umbrella Organisation is envisioned as a However, digital services require a strong and secure shared platform that can support member banks with technological foundation. If the underlying systems common technology solutions, centralised services, are weak, the infrastructure outdated, or the staff capacity-building programmes, and improved access unprepared, the bank - and its customers - become to modern tools and expertise. It can be a force vulnerable to serious risks such as fraud, data multiplier - especially for smaller UCBs - allowing them breaches, and prolonged service disruptions. to benefit from economies of scale while retaining their unique identity and local focus. NUCFDC is also Cybersecurity is not just a technical issue - it is expected to provide certain fund-based facilities to a governance issue. The Board must be fully aware member banks such as supporting them in capital of the bank’s digital capabilities and its cyber risk enhancement, providing refinance, and addressing profile. Any decision to expand digital offerings must short term liquidity requirements. be based on a realistic assessment of readiness and must be accompanied by appropriate investment in The success of this initiative, however, depends systems, processes, and people. on broad-based and active participation. The RBI Bulletin July 2025 19SPEECH Working Together, Growing Stronger: Responsible Governance for a Resilient UCB Sector cooperative movement has always drawn its strength be better understood and managed. Technology must from unity. The Umbrella Organisation offers an be adopted thoughtfully and securely. Above all, the opportunity to renew that spirit - by building shared trust of your depositors must remain non-negotiable. resilience for a digital and dynamic future. Therefore, each of you has both the opportunity Conclusion and the responsibility to shape the future of your institution. Let me conclude by reiterating that Urban Cooperative Banks matter. You represent a model The Reserve Bank stands with you - as a regulator, that is built not just on profit, but on purpose. as a guide, and as a partner. Let us work together to ensure that UCBs remain a strong, resilient, and As the financial landscape evolves, however, the vibrant part of India’s financial system. expectations from you, especially as Directors, are also rising. Governance must be sharper. Risks must Thank you, Jai Hind. 20 RBI Bulletin July 2025ARTICLES State of the Economy Revisiting the Oil Price and Inflation Nexus in India Determinants of Overnight Uncollateralised Money Market Volume - An Empirical Assessment Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary PolicyState of the Economy ARTICLE State of the Economy* activity in June, after two months of contraction, alongside a robust expansion in services activity. The global macroeconomic environment remained Weak consumer and business confidence, however, fluid in June and July so far amidst geo-political tensions raises apprehensions about the strength of the and tariff policy uncertainties. Domestic economic economic rebound, especially in view of the lingering activity held up, with improving kharif agricultural global trade policy uncertainties.1 While food and season prospects, continuation of strong momentum other commodity prices rose, crude oil prices ebbed in the services sector and modest growth in industrial from their mid-June peak as geo-political tensions activity. Headline CPI inflation remained below 4 per eased. cent for the fifth consecutive month in June driven by Rally in global equity markets, which commenced deflation in food prices. System liquidity remained in following the ceasefire agreement between Iran surplus to facilitate a faster transmission of policy rate and Israel, continued into July fuelled by optimism cuts to the credit markets. The external sector remained arising from progress on trade deals and strong early resilient, backed by ample foreign exchange reserves and a moderate external debt-to-GDP ratio. corporate results. Treasury yields, however, firmed up on concerns regarding the fiscal health of the Introduction US following the passage of the “One Big Beautiful The global macroeconomic environment Bill” and higher June CPI inflation data. US dollar remained fluid in June and July so far. In the recovered some of its earlier losses in the first half first fortnight of June, concerns about the rapid of July following the better than expected economic escalation of geopolitical tensions between Iran and data release. Israel led to a marked uptick in market volatility. The announcement of a ceasefire on June 23, however, Central banks in many advanced economies restored normalcy in global markets. Progress (AEs) kept policy rates unchanged, as the last mile of on several bilateral trade deals provided further disinflation turned out to be stickier than expected, impetus to the overall optimism. By early July, while also awaiting clarity on the trade tariff front however, concerns around fiscal health of the US, and its implications for inflation. Mounting risks tariff policy uncertainties and their implication to growth in many economies, on the other hand, for growth and inflation weighed on the evolving have also led central banks across AEs and emerging economic outlook. market economies (EMEs) to pre-emptively reduce High-frequency indicators of global economic key policy rates. activity point to a modest expansion in manufacturing Domestic economic activity held up in * This article has been prepared by Rekha Misra, Asish Thomas George, June, with high-frequency indicators pointing to Shashi Kant, Rajni Dahiya, Biswajeet Mohanty, Shreya Kansal, Yamini Jhamb, Bajrangi Lal Gupta, Harendra Kumar Behera, Gautam, Akash Raj, improving prospects of kharif agricultural season Ettem Abhignu Yadav, Radhika Singh, Alice Sebastian, Satyendra Kumar, Suganthi D, Pratibha Kedia, Paras, Nilava Das, Anjaly Maria Jose, Snigdha and continuation of strong momentum in the Yogindran, Ujjwal Kanti Manna, Shreya Gupta, Athira C A, Sai Dheeraj services sector. High-frequency indicators for Vayugundla Chenchu, Satyam Kumar, Rajas Saroy, Samridhi and Avnish Kumar. The guidance and comments provided by Dr. Poonam Gupta, industrial activity recorded modest growth in June. Deputy Governor, is gratefully acknowledged. Peer review by Jang Bahadur Singh, Atri Mukherjee and Abhinav Narayan is also acknowledged. Views expressed in this article are those of the authors and do not represent the 1 As per the University of Michigan Consumer Sentiment Index and views of the Reserve Bank of India. Conference Board Measure of CEO Confidence. RBI Bulletin July 2025 21ARTICLE State of the Economy Growth in rural demand remained resilient and however, raised a significant amount of debt from was accompanied by a recovery in urban economic capital markets via private placements. While overall activity. Amidst global economic uncertainties, the credit to the industrial sector witnessed subdued front-loading of spending by the central and state growth due to a decline in infrastructure lending, governments, with a focus on higher capex, is helping credit to the micro, small and medium enterprise to offset some slowdown witnessed in private capex (MSME) sector continued to remain strong. System expenditure. India’s merchandise trade deficit liquidity remained in surplus, supported by a slew narrowed in June 2025, due to contraction in both of liquidity augmenting measures by the Reserve oil and non-oil trade deficit. Bank to ensure orderly market conditions while facilitating faster monetary policy transmission. The Headline CPI inflation remained below the 4 external sector remained resilient, backed by ample per cent target for the fifth consecutive month in foreign exchange reserves and a moderate external June, to fall to the second lowest inflation reading debt-to-GDP ratio. in the current CPI series. This was brought about by food moving into deflation – on the back of a broad- Set against this backdrop, the remainder of based shallower seasonal uptick in vegetable prices the article is structured into four sections. Section over last year and a marked moderation in prices of II covers the rapidly evolving developments cereals, pulses and spices due to robust production. in the global economy. Section III provides an Core (CPI excluding food and fuel) inflation edged assessment of domestic macroeconomic conditions. up primarily due to further increase in gold and Section IV encapsulates financial conditions in silver prices and, at the margin, from an uptick in India, while Section V presents the concluding services inflation. Abstracting the impact of gold observations. and silver prices, core inflation continued to remain II. Global Setting benign. Global economic activity, though registering an De-escalating geo-political tensions in the Middle uptick in June, remains fragile pending clarity on East, optimism on trade deals and the easing of norms trade tariffs. With just a handful of countries able for infrastructure financing by the Reserve Bank to sign a trade agreement with the US by July 9, the buoyed up domestic financial market sentiments further extension of the date of implementation of in the second half of June. In the first half of July, the new import tariff to August 1, 2025, has led to however, domestic markets traded with a negative some momentary reprieve. Since then, Vietnam, bias as investor sentiment remained cautious amidst Indonesia, Japan, and the Philippines have entered ongoing uncertainty over the potential India-US trade into trade deals with the US. The threat of new tariff agreement and mixed corporate earnings results by hikes, in the absence of a trade deal, continues to companies in Q1:2025-26. loom over several countries (Chart II.1). On the credit side, bank credit growth moderated Volatility and uncertainty receded, in general, across key sectors in May 2025. This included a tracking the progress in tariff negotiations of the contraction in non-banking financial companies US with several countries and the de-escalation in (NBFCs) bank credit on a year-on-year basis. NBFCs, geo-political tensions (Chart II.2). Despite some 22 RBI Bulletin July 2025State of the Economy ARTICLE moderation in overall uncertainty, persistent trade months, driven by increased production in the tensions and weak global geo-political environment intermediate and investment goods sectors. The continue to weigh on macroeconomic outlook. services sector activity remained in expansion mode, notwithstanding a slight moderation, supported by The global composite purchasing managers’ financial services (Table II.1). index (PMI) rose to a three-month high in June, reflecting continued, albeit modest expansion in PMI readings remained in the expansionary zone output and new business. The global manufacturing for major AEs and EMEs in June, signalling a sequential PMI returned to expansion territory after two improvement in business activity. Major AEs, except Chart II.2: Uncertainty Indicators a. Economic Uncertainty b. Global VIX (Index) (Index) 8000 560 7000 480 6000 400 5000 399.2 4000 320 3000 3456.3 240 2000 160 1000 0 80 Trade Policy Uncertainty Index Economic Policy Uncertainty Index (RHS) Sources: Chicago Board Options Exchange; and www.PolicyUncertainty.com. RBI Bulletin July 2025 23 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 50 45 40 35 30 25 20 15 16.41 10 42-naJ-1 42-beF-71 42-rpA-4 42-yaM-12 42-luJ-7 42-guA-32 42-tcO-9 42-voN-52 52-naJ-11 52-beF-72 52-rpA-51 52-nuJ-1 52-luJ-81 Chart II.1: New Tariffs Announced by the US (In per cent) Note: Countries are ranked in the order of the tariff levied by the US on April 02, 2025. Sources: The White House; and Reuters.ARTICLE State of the Economy Table II.I Global Purchasing Managers’ Index Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 PMI composite 52.9 52.5 52.9 51.9 52.3 52.4 52.6 51.8 51.5 52.0 50.8 51.2 51.7 PMI manufacturing 50.8 49.7 49.6 48.7 49.4 50.1 49.6 50.1 50.6 50.3 49.8 49.5 50.3 PMI services 53.1 53.3 53.9 52.9 53.1 53.1 53.8 52.2 51.5 52.6 50.9 52.0 51.9 PMI export orders 49.7 49.6 49.0 48.5 48.9 49.3 48.7 49.6 49.7 50.1 47.5 48.0 49.1 PMI export orders: 49.3 49.4 48.4 47.5 48.3 48.6 48.2 49.4 49.6 50.1 47.3 48.0 49.3 manufacturing PMI export orders: 50.7 50.6 50.8 51.6 50.7 51.4 50.4 50.2 50.2 50.1 48.2 47.9 48.7 services 50 <<<<<<Contraction-------------------------------------------------------Expansion>>>>>> Notes: 1. The Purchasing Managers’ Index (PMI), a diffusion index, captures the change in each variable compared to the prior month, noting whether each has risen/improved, fallen/deteriorated or remained unchanged. A PMI value >50 denotes expansion, <50 denotes contraction and =50 denotes ‘no change’. 2. Heat map is applied to data from April 2023 to May 2025. The map is colour coded - red denotes the lowest value, yellow denotes 50 (or the no change value), and green indicates the highest value in each of the PMI series. Source: S&P Global. Canada, Italy and Singapore experienced an uptick chain pressure index eased to its historical average in June compared to the preceding month. Among in June 2025 (Annex Chart A1). major emerging market and developing economies Commodity prices witnessed a rebound in June, (EMDEs), India and China showed improvement, but with both the World Bank commodity price index Brazil and Russia registered contraction in business and the Bloomberg commodity index registering an activity (Chart II.3a). New export orders remained in increase. The uptick in global commodity prices was contraction for most major economies, barring India, driven primarily by gains in energy, industrial metals, Germany and the US (Chart II.3b). The global supply and precious metals on account of a slew of factors Chart II.3: Purchasing Managers’ Index: Comparison across Jurisdictions a. S&P Global Composite PMI b. PMI Export Orders (Index) (Index) 64 60 56 52 48 44 40 Jun-25 May-25 Jun-25 May-25 Note: A level of 50 indicates no change in activity, while a reading above 50 signals expansion and below 50 suggests contraction. Source: S&P Global. 24 RBI Bulletin July 2025 aidnI SU niapS KU labolG ailartsuA napaJ anihC ylatI eropagniS enozoruE ynamreG ecnarF lizarB aissuR adanaC 60 58 56 54 52 50 48 46 44 42 40 aidnI ynamreG setatS detinU )dnalniam( anihC enozoruE ecnarF niapS napaJ ylatI modgniK detinU ailartsuA aissuR adanaCState of the Economy ARTICLE such as imposition of new trade tariffs by the US on Among EMEs, CPI inflation edged up marginally imports and geo-political tensions, among others. in Brazil, while it moderated in Russia. However, Global food prices remained largely steady in June inflation remained elevated and above the target 2025, with an increase in the prices of vegetable oil, rate in both the countries. China moved out of the meat and dairy, partially offset by moderation in the deflation zone after four months (Chart II.5b and prices of sugar and cereals (Chart II.4a).2 Oil prices Annex chart A2). surged in mid-June amidst escalating geopolitical Global stock indices rallied since end-June to conflict between Iran and Israel but later corrected record levels, driven by the Iran-Israel ceasefire following the announcement of a ceasefire and agreement and improved earnings reported by large also from the decision of OPEC plus to increase US companies (Chart II.6a). In June, the 10-year US production. Gold rallied in the first half of June on G-Sec yield softened on rising expectations of a rate safe haven demand and a weakening US dollar but cut. Yields, however, began to rise in July following eased in the second half as geopolitical tensions the passage of the new tax bill by the US Congress, subsided. In July so far, Bloomberg commodity price on concerns about its implications for medium-term index moved with an upside bias amidst a range government debt trajectory. Treasury yields inched bound movement in crude oil prices and metals up further upon the release of higher June inflation prices (Chart II.4b). data that showed signs of tariffs passthrough. EME CPI inflation in major AEs registered an uptick in bond spreads continued to widen on account of June, with the US, Euro area and the UK witnessing elevated global uncertainty raising risk premiums a pick-up due to increase in goods inflation amidst (Chart II.6b). The US dollar index weakened in June as persistence in services inflation. Japan, however, investors grew wary of its safe haven appeal amidst saw some moderation in its inflation (Chart II.5a). increased debt concerns (Chart II.6c). Mirroring the Chart II.4: Commodity and Food Prices a. Commodity and Food Indices b. Gold - Copper - Brent Crude Oil Index (Jan 2024=100) Index (Jan 2024=100) 110 108.8 105.9 105 100 96.0 95 90 Bloomberg commodity index Food price index World Bank Commodity Price Index Gold Copper Brent Crude oil Sources: Bloomberg; World Bank Pink Sheet; and FAO. 2 As per the Food and Agriculture Organization’s Food Price Index for the month of June 2025. RBI Bulletin July 2025 25 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 160 164.7 145 130 115 116.5 100 85 87.4 70 42-naJ-10 42-beF-71 42-rpA-40 42-yaM-12 42-luJ-70 42-guA-32 42-tcO-90 42-voN-52 52-naJ-11 52-beF-72 52-rpA-51 52-nuJ-10 52-luJ-81ARTICLE State of the Economy dollar movement, the MSCI EME currency index (Chart II.6d). However, in July (up to July 18), the increased with equity markets recording inflows dollar strengthened, supported by stronger-than- Chart II.6: Global Financial Markets a. Equity Indices (MSCI) b. Government Bond Yields Index (Jan 2024=100) (Per cent, left scale; index, right scale) 128.3 128.1 125 126.4 120 115 110 105 100 95 World AEs EMEs US government bonds JPMorgan EMBI global spread (RHS) Source: Bloomberg. Source: Bloomberg. c. Currency Indices d. Portfolio Flows to EMEs (Index, left scale; Index, right scale) (US$ billion) MSCI EME Currency Index Dollar index (RHS) Debt Equity Total Source: Bloomberg. Source: Institute of International Finance. 26 RBI Bulletin July 2025 42-naJ-10 42-beF-71 42-rpA-40 42-yaM-12 42-luJ-70 42-guA-32 42-tcO-90 42-voN-52 52-naJ-11 52-beF-72 52-rpA-51 52-nuJ-10 52-luJ-81 114.4 5.0 114 4.5 110 4.4 106 4.0 102 3.5 98 42-naJ-10 42-beF-71 42-rpA-40 42-yaM-12 42-luJ-70 42-guA-32 42-tcO-90 42-voN-52 52-naJ-11 52-beF-72 52-rpA-51 52-nuJ-10 52-luJ-81 1,860 109 1,840 107 1,820 1843.9 105 1,800 103 1,780 101 1,760 98.5 99 1,740 97 1,720 95 1,700 93 42-naJ-10 42-beF-71 42-rpA-40 42-yaM-12 42-luJ-70 42-guA-32 42-tcO-90 42-voN-52 52-naJ-11 52-beF-72 52-rpA-51 52-nuJ-10 52-luJ-81 10 5 0 -0.1 -5 -5.3 -5.5 -10 -15 -20 -25 42-naJ-1 42-beF-71 42-rpA-4 42-yaM-12 42-luJ-7 42-guA-32 42-tcO-9 42-voN-52 52-naJ-11 52-beF-72 52-rpA-51 52-nuJ-1 52-luJ-81 Chart II.5: Headline Inflation a. Select AEs b. Select EMEs (Per cent) (Per cent) 4.0 3.6 3.5 3.3 3.0 2.7 2.5 2.0 2.0 1.5 1.0 Brazil Russia China US UK Euro area Japan South Africa India Sources: Bloomberg; and OECD. 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 10 9 9.4 8 7 6 5 5.4 4 3.0 3 2 2.1 1 0 0.1 -1 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJState of the Economy ARTICLE expected non-farm payroll data, which helped ease III. Domestic Developments investor concerns. Amidst a challenging global environment, the In their monetary policy meetings held in June Indian economy showed resilience. High-frequency and up to July 18, most AE central banks continued to indicators suggest stability in aggregate demand. hold or cut their policy rates, exercising caution amidst Growth momentum was buoyant for agriculture and heightened uncertainties while supporting growth. In services sector while the growth in industrial sector June, Canada, Japan, the UK and the US maintained remained modest. status quo on rates, while the European Central Bank Aggregate Demand and Sweden lowered their policy rates by 25 basis points (bps) each in response to further moderation in The high-frequency indicators for overall inflation. Switzerland also reduced its key rate in June economic activity showed mixed signals in June. by 25 bps to zero amidst domestic deflation. Amongst E-way bills and toll collection showed strong growth, EME central banks, Mexico, Philippines and Russia while growth in goods and services tax (GST) cut rates by 50 bps, 25 bps, and 100 bps, respectively. revenue collections moderated sharply in June (Table In contrast, Brazil raised its policy rate by 25 bps to its III.1). Petroleum consumption recorded a modest highest level since July 2006 in response to persistent expansion, even as the growth of petrol, diesel, and inflationary pressures (Chart II.7). In July so far, while air turbine fuel moderated.3 Electricity demand fell Australia, New Zealand, South Korea and China held marginally, mainly due to reduced usage of cooling policy rates steady, Malaysia and Indonesia reduced appliances amidst the early onset of monsoon.4 their rates by 25 bps each. Volume of digital transactions exhibited robust Chart II.7: Policy Rates Type Countries 3 Growth in petroleum consumption was driven by coke, which recorded a growth of 18.9 per cent (y-o-y) in June 2025 vis-à-vis 6.0 per cent in May 2025. 4 Power consumption dips slightly by 1.5 pc to 150.04 bn units in June. RBI Bulletin July 2025 27 22-naJ 32-naJ 42-naJ 52-naJ 52-nuJ 5202.70.81 Australia 0 0 0 0 0 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Canada 0 0 0 1 0 1 1 0 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 0 -1 0 0 0 0 0 0 0 Euro area 0 0 0 0 0 0 1 0 1 0 1 1 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 0 0 0 0 0 0 0 0 0 0 Japan 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Advanced New Zealand 0 0 0 1 1 0 1 1 0 1 1 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 -1 0 0 -1 0 0 0 0 0 Economies South Korea 0 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Sweden 0 0 0 0 0 0 1 0 1 0 1 0 0 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 0 0 0 0 0 0 0 0 Switzerland 0 0 0 0 0 1 0 0 1 0 0 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 0 0 0 0 0 0 0 United Kingdom 0 0 0 0 0 0 0 1 1 0 1 1 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 United States 0 0 0 0 1 1 1 0 1 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 0 0 0 0 0 0 0 0 0 0 Brazil 0 2 1 0 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0 -1 -1 0 -1 -1 0 -1 -1 0 0 0 0 0 0 0 1 1 1 0 1 0 1 0 0 China 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 India 0 0 0 0 0 1 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 0 Indonesia 0 0 0 0 0 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Emerging Malaysia 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Market Mexico 0 1 1 0 1 1 0 1 1 0 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 -1 0 -1 -1 0 Economies Philippines 0 0 0 0 0 0 1 1 1 0 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Russia 0 0 -3 -6 -2 -2 0 0 -1 0 0 0 0 0 0 0 0 1 4 1 2 0 1 0 0 0 0 0 0 2 0 1 2 0 0 0 0 0 0 0 -1 0 Saudi Arabia 0 0 0 0 1 1 1 0 1 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 0 0 0 0 0 0 0 0 0 0 South Africa 0 0 0 0 1 0 1 0 1 0 1 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Thailand 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Rate Change < -0.75 -0.75 to -0.50 -0.50 to -0.25 -0.25 to 0 0 to 0.25 0.25 to 0.50 0.50 to 0.75 > 0.75 Source: Bloomberg.ARTICLE State of the Economy Table III.1: High Frequency Indicators- Economic Activity- Growth Rate May- Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 Jun-25 25 GST E-way bills 16.3 19.2 12.9 18.5 16.9 16.3 17.6 23.1 14.7 20.2 23.4 18.9 19.3 GST revenue 7.6 10.3 10.0 6.5 8.9 8.5 7.3 12.3 9.1 9.9 12.6 16.4 6.2 Toll collection 5.8 9.4 6.8 6.5 7.9 11.9 9.8 14.8 18.7 11.9 16.6 16.4 15.5 Electricity demand 8.0 4.0 -5.0 -0.8 -0.4 3.7 5.1 1.3 2.4 5.7 2.8 -4.8 -1.9 Petroleum consumption 2.3 10.7 -3.1 -4.4 4.1 10.6 2.0 3.0 -5.2 -3.1 0.2 1.1 1.9 Of which Petrol 4.6 10.5 8.6 3.0 8.7 9.6 11.1 6.7 5.0 5.7 5.0 9.2 6.8 Diesel 1.0 4.5 -2.5 -1.9 0.1 8.5 5.9 4.2 -1.3 0.9 4.2 2.2 1.6 Aviation turbine fuel 10.1 9.6 8.1 10.4 9.4 8.5 8.7 9.4 4.2 5.7 3.9 4.3 3.3 Digital payments -volume 40.6 36.7 34.9 36.3 40.3 30.1 33.1 33.0 26.7 30.8 30.0 29.2 26.6 Digital payments - value 13.5 22.1 16.7 21.5 27.5 9.5 19.6 18.6 9.5 17.3 18.4 12.6 17.7 <<<<<<Contraction-------------------------------------------------------Expansion>>>>>> Notes: 1. Y-o-y growth (in per cent) has been calculated for all indicators. 2. The heat map applied to the data from April 2023 till June 2025 translates the data range for each indicator into a colour gradient scheme with red denoting the lowest values and green corresponding to the highest values of the respective data series. For digital payments data, zero growth is taken as the lower bound. Sources: Goods and Services Tax Network (GSTN); RBI; Central Electricity Authority (CEA); and Ministry of Petroleum and Natural Gas, GoI. growth in June. In value terms, digital transactions automobile sales growth moderated marginally but growth registered a pickup, despite a slowdown stayed above the average level5, while tractor sales in unified payments interface (UPI) growth, on recorded stronger growth. Household demand for account of an uptick in the growth of real time gross employment under the Mahatma Gandhi National settlements (RTGS). Rural Employment Guarantee Scheme (MGNREGS) High-frequency indicators for June signalled remained elevated during June, indicative of steady demand conditions. Urban demand witnessed continued reliance on alternative livelihood options a revival in June, recovering from the moderation during the pre-sowing lean agricultural period in May. Rural demand remained resilient. Retail (Table III.2). Table III.2: High Frequency Indicators- Rural and Urban Demand- Growth Rate Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Urban Domestic air passenger traffic 6.9 7.6 6.7 7.4 9.6 13.8 10.8 14.1 12.1 9.9 9.7 2.6 3.9 demand Retail passenger vehicle sales -6.8 10.2 -4.5 -18.8 32.4 -13.7 -2.0 15.5 -10.3 6.3 1.6 -3.1 2.5 Retail automobile sales 0.7 13.8 2.9 -9.3 32.1 11.2 -12.5 6.6 -7.2 -0.7 3.0 5.1 4.8 Rural Retail tractor sales -28.4 -11.9 -11.4 14.7 3.1 29.9 25.8 5.2 -14.5 -5.7 7.6 2.8 8.7 demand MGNREGS: work demand -21.7 -19.5 -16.0 -13.4 -7.6 3.9 8.2 14.4 2.8 2.2 -6.5 4.5 4.4 Retail Two-wheeler sales 4.7 17.2 6.3 -8.5 36.3 15.8 -17.6 4.2 -6.3 -1.8 2.3 7.3 4.7 <<Contraction ------------------------------------------------------------------------------------------ Expansion>> Notes: 1. The y-o-y growth (in per cent) has been calculated for all indicators. 2. Heat map, applied on data from April 2023 till June 2025, translates the data range for each indicator into a colour gradient scheme with red denoting the lowest values and green corresponding to the highest values of the respective data series. 3. The data on domestic air passenger traffic for June 2025 growth rate is calculated by aggregating daily data. Sources: Airports Authority of India; Federation of Automobile Dealers Associations (FADA); and Ministry of Rural Development, GoI. 5 Average during the last 12 months, i.e., June 2024 to May 2025. 28 RBI Bulletin July 2025State of the Economy ARTICLE Employment indicators in June presented a Government Finances mixed picture. The all-India unemployment rate The key deficit indicators of the union remained unchanged from previous month at 5.6 government, viz., gross fiscal deficit (GFD), revenue per cent with rural areas faring better as compared deficit and primary deficit witnessed an improvement to their urban counterparts.6 The labour force during April-May 2025 over the corresponding period participation rate and worker population ratio of the previous year. While GFD was at 0.8 per cent declined marginally, driven by rural areas. The decline of its 2025-26 BE as against 3.1 per cent of its BE was influenced by seasonal agricultural patterns, during the corresponding period of the previous year, intense summer heat limiting outdoor work, and revenue surplus and primary surplus, in absolute a shift of unpaid helpers–particularly from higher- terms, were higher than their corresponding levels income rural households–towards domestic duties. during the same period in the previous year (Chart Organised job listings, as per the Naukri JobSpeak III.1a). Index, recorded strong growth, led by robust hiring in artificial intelligence /machine learning, On the receipts side, revenue receipts expanded insurance, hospitality, business process outsourcing/ by 24.0 per cent during April-May 2025-26 over April- information technology enabled services and real May 2024-25, driven by growth in both indirect and estate. PMI employment indices showed a pick-up in direct taxes.7 The non-tax revenue recorded a growth manufacturing employment index, to reach an all- of 41.8 per cent, led by higher growth in dividends time high in June. PMI employment index for the and profits. The non-debt capital receipts recorded a services sector also picked-up in June, though at a higher growth in April-May 2025-26 as compared to lower rate than May (Table III.3). the corresponding period of the previous year. Table III.3: High Frequency Indicators- Employment Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Unemployment rate (PLFS: All-India) 5.1 5.6 5.6 Unemployment rate (PLFS: Rural) 4.5 5.1 4.9 Unemployment rate (PLFS:Urban) 6.5 6.9 7.1 Naukri JobSpeak index -7.6 11.8 -3.4 6.0 10.0 2.0 8.7 3.9 4.0 -1.5 8.9 0.3 10.5 EPFO net pay roll addition -6.2 -5.8 -11.2 -16.2 -50.6 -9.0 -23.4 -17.6 -14.2 1.2 77.1 PMI employment: manufacturing 54.1 53.7 53.5 52.1 53.3 52.9 53.4 54.8 54.5 53.4 54.2 54.9 55.1 PMI employment: services 53.7 53.5 53.1 53.4 54.3 56.6 55.5 56.3 56.2 52.5 53.9 57.1 55.1 <<Contraction ------------------------------------------------------------------------------------------ Expansion>> Notes: 1. All PLFS indicators are in the current weekly status and for people aged 15 years and above. 2. The y-o-y growth (in per cent) has been calculated for Naukri index and EPFO net payroll addition. 3. Heat map is applied on data from April 2023 till June 2025, other than for EPFO Net Payroll addition, where the data is till April 2025. 4. The heat map translates the data range for each indicator into a colour gradient scheme with red denoting the lowest values and green corresponding to the highest values of the respective data series. 5. All PMI values are reported in index form. A PMI value >50 denotes expansion, <50 denotes contraction and =50 denotes ‘no change’. In the PMI heat maps, red denotes the lowest value, yellow denotes 50 (or the no change value), and green denotes the highest value in each of the PMI series. Sources: Ministry of Statistics and Program Implementation (MoSPI), GoI; S&P Global; Employees’ Provident Fund Organisation and Info Edge. 6 PLFS Monthly Bulletin June 2025. 7 Indirect taxes grew by 19.3 per cent (y-o-y) led by GST, while direct taxes grew by 5.1 per cent (y-o-y) driven by income tax collections. RBI Bulletin July 2025 29ARTICLE State of the Economy Chart III.1: Major Fiscal Indicators (Up to end-May) a. Deficit Indicators b. Receipts and Expenditure (Actuals as per cent of budget estimates) (Actuals as per cent of budget estimates) 20 40 10 33.2 0.8 30 0 20.7 -10 19.7 20 -20 13.3 -30 10 -40 -34.9 0 -50 -46.0 2023-24 2024-25 2025-26 2023-24 2024-25 2025-26 Revenue expenditure Capital expenditure Gross fiscal deficit Primary deficit Revenue deficit Revenue receipts Non-debt capital receipts Note: Negative revenue deficit and primary deficit numbers, as per cent of budget estimates, in Chart III.1a indicate revenue surplus and primary surplus respectively. Source: Controller General of Accounts (CGA). During April-May 2025, total expenditure grew expenditure vis-à-vis 12.9 per cent during the same by 19.7 per cent on a y-o-y basis, accounting for 14.7 period a year ago, indicative of front-loading of per cent of the budget estimates for 2025-26. Revenue capital spending by the central government (Chart expenditure growth during April-May was largely on III.1b). account of an increase in interest payments, though Key deficit indicators of states during April-May expenditure on major subsidies was lower compared to a year ago. Capital expenditure recorded robust 2025, on the other hand, were higher than last year’s growth during the first two months of 2025-26 level (Chart III.2a). This was on account of a subdued and was at 19.7 per cent of the budgeted capital growth in states’ revenue receipts (0.6 per cent y-o-y) Chart III.2: States’ Fiscal Performance Indicators (Up to end-May) a. Deficit Indicators b. Receipts and Expenditure (Actuals as per cent of budget estimates) (Growth in per cent, year-on-year) 100 20 78.9 75 15 13.5 50 10 7.7 25 5 16.1 13.6 0.6 0 0 2024-25 2025-26 2024-25 over 2023-24 2025-26 over 2024-25 Gross fiscal deficit Revenue deficit Primary deficit Revenue expenditure Revenue receipts Capital expenditure Note: Data pertains to 24 states. Source: Comptroller and Auditor General of India. 30 RBI Bulletin July 2025State of the Economy ARTICLE while at the same time registering significantly higher fabrics/made-ups, handloom products etc., and tobacco expenditure growth. Muted growth was observed in contributed negatively while, electronic goods, drugs both tax and non-tax revenue categories, alongside a and pharmaceuticals, engineering goods, marine sharp decline in grants from the union government products, meat, dairy and poultry products supported (Chart III.2b). Among key tax components, growth export growth in June. Exports to 12 out of 20 major in states’ goods and services tax (SGST)8 and state destinations contracted in June 2025, including those excise tax moderated, while sales tax/value added to the UAE, Netherlands and the UK. However, exports tax registered a pickup in growth as compared to last to the US, China and Singapore expanded during the year. States’ revenue expenditure increased by 7.7 per month. cent, while capital expenditure witnessed a stronger Mirroring exports, merchandise imports at US$ growth of 13.5 per cent, buoyed by the ₹1.5 lakh crore 53.9 billion declined by 3.7 per cent (y-o-y) in June, outlay for 50-year interest-free loans in the Union mainly due to a decline in gold imports volume and Budget 2025-26. oil imports price (Chart III.4). Trade Imports of 17 out of 30 commodities (accounting India’s merchandise exports contracted by 0.1 for 62.2 per cent of the import basket in 2024- per cent (y-o-y) to US$ 35.1 billion in June, partly 25) registered contraction on a y-o-y basis in June. due to contraction in the price of petroleum, oil and Petroleum, crude and products, gold, coal, coke and lubricants exports (Chart III.3). briquettes, etc., transport equipment, pearls, precious Exports of 14 out of 30 major commodities and semi-precious stones dragged imports down, while (accounting for 30.5 per cent of the export basket in electronic goods, chemical material and products, 2024-25) contracted on a y-o-y basis in June. Petroleum machinery, electrical and non-electrical, metalliferous products, gems and jewellery, iron ore, cotton yarn/ ores and other minerals, and vegetable oil supported Chart III.3: India's Merchandise Exports a. Trend in Exports b. Decomposition of Sequential Change in Export Growth (US$ billion, left scale; growth in per cent, right scale) (Per cent, y-o-y) 45 40 40 30 35 30 20 25 10 20 -0.1 15 0 10 -10 5 0 -20 Exports excluding petroleum, oil and lubricants Petroleum, oil and lubricants Y-o-y, growth (RHS) Base effect Momentum ∆ in y-o-y growth Sources: PIB; DGCI&S; and RBI staff estimates. 8 States’ GST is the total of the GST revenues of the States/UTs and their share of IGST. During April 2025, ₹23,000 crore was settled to clear an old IGST shortfall, resulting in a decline in GST revenue of the States. https://tutorial.gst.gov.in/downloads/news/approved_monthly_gst_data_for_publishing_apr_2025.pdf RBI Bulletin July 2025 31 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 25 20 15 10 5 2 0 -5 -10 -15 -20 -25 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJARTICLE State of the Economy import growth during the month. Imports from 10 narrowed to US$ 9.6 billion in June 2025 from US$ out of 20 major source countries contracted in June. 11.3 billion a year ago. Consequently, its share in total Among major trading partners, imports from the UAE, trade deficit increased to 48.9 per cent in June from Russia and the US contracted while imports from 45.9 per cent a year ago. China, Saudi Arabia, and Singapore expanded in June. In May, net services export earnings expanded by Merchandise trade deficit narrowed to US$ 18.8 23.7 per cent (y-o-y) to US$ 15.8 billion. While imports billion in June 2025 from US$ 20.8 billion in June 2024. Oil deficit narrowed to US$ 9.2 billion in June contracted by 1.1 per cent to US$16.7 billion, exports from US$ 9.6 billion a year ago, whereas non-oil deficit rose by 9.6 per cent to US$32.5 billion (Chart III.5). Chart III.5: Trend in Services Exports and Imports Per cent (y-o-y) 35 30 25 20 15 10 9.6 5 0 -1.1 -5 -10 -15 Exports Imports Source: RBI. 32 RBI Bulletin July 2025 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM Chart III.4: India's Merchandise Imports a. Trend in Imports b. Decomposition of Sequential Change in Import Growth (y-o-y) (US$ billion, left scale; growth in per cent, right scale) (Per cent, y-o-y) 80 60 70 50 60 40 50 30 40 20 30 -3.7 10 20 0 10 -10 0 -20 Imports excluding petroleum, oil, lubricants and gold Gold Petroleum, oil and lubricants Y-o-y, growth (RHS) Base effect Momentum ∆ in y-o-y growth Sources: PIB; DGCI&S; and RBI staff estimates. 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 30 20 -2 10 0 -10 -20 -30 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJState of the Economy ARTICLE Aggregate Supply Agriculture The south-west monsoon has covered the entire country nine days ahead of its usual date of July 8. The cumulative rainfall during June 1- July 21, 2025 at the all-India level stands at 6 per cent above its normal (Chart III.6). Reservoir levels have surged to a record high of 57 per cent of the full capacity (as on July 17, 2025), as compared to the corresponding period of the preceding years (Chart III.7). Early onset and timely progress of southwest monsoon have helped to boost kharif sowing to 708 lakh hectares (as on July 18, 2025), registering 4.1 per cent growth compared to the corresponding period of last year (Chart III.8). Among the major crops, rice, coarse cereals, moongbean and sugarcane showed Wheat procurement during 2025-26 has been higher sowing than previous year while oilseeds, significantly higher than last year, resulting in the arhar, uradbean and cotton recorded lower sowing. largest wheat stockpile in four years with the Food Kharif sowing has so far covered 65 per cent of the Corporation of India (FCI).9 Stock of rice with FCI total normal kharif area. also remains well above the buffer norms.10 Chart III.6: Progress of South-West Monsoon Rainfall (Cumulative deviation from normal in per cent) 100 80 60 40 20 6 0 -1 -20 -40 -60 2024 2025 Source: India Meteorological Department. 9 Procurement of 300 lakh tonnes as on July 1, 2025. 10 557 lakh tonnes as on July 1, 2025. RBI Bulletin July 2025 33 10 nuJ 40 nuJ 70 nuJ 01 nuJ 31 nuJ 61 nuJ 91 nuJ 22 nuJ 52 nuJ 82 nuJ 10 luJ 40 luJ 70 luJ 01 luJ 31 luJ 61 luJ 91 luJ Chart III.8: Kharif Sown Area (Lakh hectares, left scale; per cent, right scale) 200 120 180 100 160 140 80 120 100 60 80 40 60 40 20 20 0 0 Rice Pulses Coarse Oilseeds Sugarcane Cotton cereals 2024-25 2025-26 Percentage of sowing completed (RHS) Notes: 1. Data are as on July 18. 2. Sugarcane area pertains to crop season 2023-24 and 2024-25 (June 01-May 31). Source: Ministry of Agriculture and Farmers’ Welfare. Chart III.7: Reservoir Storage (As per cent of full reservoir level) 60 57 50 40 34 30 20 10 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Weekly storage Normal storage Note: Data pertains to third week of July. Source: Central Water CommissionARTICLE State of the Economy Industry and Services Available high-frequency indicators for June point to modest industrial activity, with steady Industrial activity, as measured by the Index expansion in PMI manufacturing and strong growth of Industrial Production (IIP), moderated to a nine- in capital goods and steel output. Automobile month low in May, driven by a contraction in production moderated in June, dragged down by mining and electricity output, while manufacturing registered modest growth. Among the use-based passenger vehicle and two-wheeler. Conventional categories, primary goods, consumer durables, and electricity generation remained subdued for consumer non-durables recorded a decline, whereas the third consecutive month, driven by early capital, infrastructure and construction goods posted rains and softer industrial output. In contrast, robust growth. In June, index of Eight Core Industries renewable energy generation sustained its pace edged up, driven by increase in production of steel [Table III.4]. Supply chain pressures eased in June and cement. 2025, falling below their historical average levels and Table III.4: High Frequency Indicators- Industry- Growth Rate Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 IIP-headline 4.9 5.0 0.0 3.2 3.7 5.0 3.7 5.2 2.7 3.9 2.6 1.2 IIP manufacturing 3.5 4.7 1.2 4.0 4.4 5.5 3.7 5.8 2.8 4.0 3.1 2.6 IIP capital goods 3.6 11.7 0.0 3.5 2.9 8.9 10.5 10.2 8.2 3.6 14.0 14.1 PMI manufacturing 58.3 58.1 57.5 56.5 57.5 56.5 56.4 57.7 56.3 58.1 58.2 57.6 58.4 PMI export order 56.2 57.2 54.4 52.9 53.6 54.6 54.7 58.6 56.3 54.9 57.6 56.9 60.6 PMI manufacturing: future output 64.0 64.1 62.1 61.6 62.1 65.5 62.5 65.1 64.9 64.4 64.6 63.1 62.2 Eight core index 5.0 6.3 -1.5 2.4 3.8 5.8 5.1 5.1 3.4 4.5 1.0 1.2 1.7 Electricity generation: conventional 9.7 6.8 -3.8 -1.3 0.5 2.7 4.5 -1.3 2.4 4.8 -1.9 -8.2 -6.4 Electricity generation: renewable 2.0 14.2 -3.7 12.5 14.9 19.0 17.9 31.9 12.2 25.2 28.0 18.2 Automobile production 15.4 16.8 4.4 10.1 10.0 8.0 1.3 9.4 2.3 6.5 -1.7 5.2 1.2 Passenger vehicle production 0.8 1.2 0.7 -3.4 -4.0 6.5 9.2 3.7 4.5 11.2 10.8 5.4 -1.8 Tractor production 3.0 8.1 -1.0 2.7 0.4 24.7 20.9 23.7 -7.8 18.5 20.5 9.1 9.8 Two-wheelers production 18.7 21.1 4.9 12.9 13.3 8.8 -0.6 10.3 1.6 5.6 -4.1 4.7 1.4 Three-wheelers production 7.8 6.0 9.0 3.9 -6.7 -5.5 7.6 16.2 6.5 6.0 4.1 16.9 8.6 Crude steel production 3.5 5.8 2.6 0.3 4.2 4.5 8.3 7.4 6.0 8.5 9.3 9.7 12.2 Finished steel production 5.4 6.0 2.7 0.7 4.0 2.8 5.3 6.7 6.7 10.0 6.6 6.8 12.5 Import of capital goods 15.1 11.8 12.3 10.9 7.0 4.7 6.1 15.5 -0.5 8.6 21.5 14.3 2.6 <<Contraction ------------------------------------------------------------------------- Expansion>> Notes: 1. The y-o-y growth (in per cent) has been calculated for all indicators (except for PMI). 2. The heat map translates the data range for each indicator into a colour gradient scheme with red denoting the lowest values and green corresponding to the highest values of the respective data series. 3. Heat map is applied on data from April 2023 till June 2025, other than for IIP, and electricity generation: renewable, where the data is till May 2025. 4. All PMI values are reported in index form. A PMI value >50 denotes expansion, <50 denotes contraction and =50 denotes ‘no change’. In the PMI heat maps, red denotes the lowest value, yellow denotes 50 (or the no change value), and green denotes the highest value in each of the PMI series. Sources: Ministry of Statistics and Programme Implementation (MoSPI); S&P Global; Central Electricity Authority (CEA), Ministry of Power; Society of Indian Automobile Manufacturers (SIAM); Office of Economic Adviser, GoI; Joint Plant Committee; Directorate General of Commercial Intelligence & Statistics; and Ministry of Commerce and Industry. 34 RBI Bulletin July 2025State of the Economy ARTICLE reversing the brief uptick observed in May (Annex Chart III.9: Annual Installed Capacity Chart A3). (Per cent) 100 According to the Report of the World Economic 90 Forum on ‘Fostering Effective Transition 2025’, India is leading the clean energy investments in emerging 80 38.8 40.9 43.0 45.0 48.0 50.1 70 markets.11 Reflecting India’s commitment under its 60 Nationally Determined Contributions to achieve 50 6.6 6.4 6.1 5.8 5.3 4.3 40 around 50 per cent of cumulative installed electric 30 power capacity from non-fossil fuel sources by 2030, 54.6 52.7 50.9 49.2 46.7 45.6 20 the country has reached a significant milestone in 10 its energy transition journey. As of June 2025, non- 0 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26* fossil fuel sources account for 50.1 per cent of India’s Coal Oil & Gas Non-Fossil installed power capacity—achieving the target five Notes: 1. Non-fossil installed capacity includes bio power, hydro, nuclear, solar years ahead of schedule (Chart III.9). and wind. 2. *: Until June 2025. Source: NITI Aayog Dashboard. India’s services sector sustained its strong growth momentum in June, with PMI services recording expanded for the seventh consecutive month in June, the highest expansion in 10 months, driven by new led by a higher growth in petroleum, oil and lubricants, business activity and hiring (Table III.5). Port traffic other liquids and containerised cargo. Growth in Table III.5: High Frequency Indicators- Services- Growth Rate Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 PMI Services 60.5 60.3 60.9 57.7 58.5 58.4 59.3 56.5 59.0 58.5 58.7 58.8 60.4 International Air Pas- 11.3 8.8 11.1 11.2 10.3 10.7 9.0 11.1 7.7 6.8 13.0 5.0 senger Traffic Domestic Air Cargo 10.3 8.8 0.6 14.0 8.9 0.3 4.3 6.9 -2.5 4.9 16.6 2.3 International Air Cargo 19.6 24.4 20.7 20.5 18.4 16.1 10.5 7.1 -6.3 3.3 8.6 6.8 Port Cargo Traffic 6.8 5.9 6.7 5.8 -3.4 -5.0 3.4 7.6 3.6 13.3 7.0 4.3 5.6 Retail Commercial -4.7 5.9 -6.0 -10.4 6.4 -6.1 -5.2 8.2 -8.6 2.7 -1.0 -3.7 6.6 vehicle sales Hotel Occupancy -3.1 3.6 0.7 2.1 -5.3 11.1 -0.2 1.2 0.6 1.9 7.2 7.2 Tourist Arrivals 5.7 -1.3 -4.2 0.4 -1.4 -0.1 -6.6 -0.2 -8.6 -13.7 Steel Consumption 19.7 13.8 10.3 10.9 8.8 8.9 7.7 9.5 10.8 14.2 6.1 8.4 9.1 Cement Production 1.8 5.1 -2.5 7.6 3.1 13.1 10.3 14.3 10.7 12.2 6.3 9.7 9.2 <<Contraction ------------------------------------------------------- Expansion>> Notes: 1. The y-o-y growth (in per cent) has been calculated for all indicators (except for PMI). 2. The heat map translates the data range for each indicator into a colour gradient scheme with red denoting the lowest values and green corresponding to the highest values of the respective data series. 3. Heat map is applied on data from April 2023 till June 2025, other than for hotel occupancy, domestic air cargo and international air passenger traffic, where the data is till May 2025. The latest data for tourist arrivals is till March 2025. 4. All PMI values are reported in index form. A PMI value >50 denotes expansion, <50 denotes contraction and =50 denotes ‘no change’. In the PMI heat maps, red denotes the lowest value, yellow denotes 50 (or the no change value), and green denotes the highest value in each of the PMI series. Sources: Federation of Automobile Dealers Associations (FADA); Indian Ports Association; Airports Authority of India; HVS Anarock; Ministry of Tourism, GoI; Joint Plant Committee; Office of Economic Adviser; and S&P Global. 11 World Economic Forum. (n.d.). Fostering Effective Energy Transition 2025. https://reports.weforum.org/docs/WEF_Fostering_Effective_Energy_ Transition_2025.pdf RBI Bulletin July 2025 35ARTICLE State of the Economy construction sector indicators – steel consumption and cement production – remained robust in June. Inflation Headline inflation, as measured by y-o-y changes in the all-India consumer price index (CPI)12, declined to 2.1 per cent in June 2025 (the lowest since January 2019) from 2.8 per cent in May (Chart III.10). The fall in headline inflation by 72 bps came from a favourable base effect of 133 bps, which more than offset a positive price momentum (m-o-m change) of 62 bps (Chart III.11). For the first time since February 2019, food group registered a deflation of (-) 0.2 per cent (y-o-y) in June as against an inflation of 1.5 per cent in May. This was driven by a deflation within vegetables, pulses, to remain elevated for LPG, while it moderated for and meat and fish sub-groups. Inflation in cereals, firewood and chips. Kerosene prices continued to fruits, milk and products, oils and fats, sugar and record deflation albeit at a lower rate. confectionery, and prepared meals moderated while that in eggs edged up (Chart III.12). Core inflation inched up higher to 4.4 per Fuel and light inflation moderated to 2.6 per cent cent in June 2025 from 4.2 per cent in May. The in June from 2.8 per cent in May. Inflation continued increase in core inflation was primarily due to a Chart III.10: Trends and Drivers of CPI Inflation a. CPI Inflation b. Contributions (Y-o-y, per cent) (In percentage points) 12 10 8 6 4.4 4 2.6 2 2.1 0 -0.2 -2 -4 -6 CPI Headline Food and beverages CPI Headline (y-o-y, per cent) Food and beverages Fuel and light CPI excluding food and fuel Fuel and light CPI excluding food and fuel Sources: NSO; and RBI staff estimates. 12 As per the provisional data released by the National Statistical Office (NSO) on July 14, 2025. 36 RBI Bulletin July 2025 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 8 7 6 5 4 3 2 2.1 1 0 -1 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ Chart III.11: CPI Headline: Base and Momentum Effect (Percentage points) 3 2 1 0.6 0 -1 -0.7 -1.3 -2 -3 -4 Sources: NSO; and RBI staff estimates. 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ M-o-m change Monthly change in y-o-y inflation Base effectState of the Economy ARTICLE Chart III.12: Annual Inflation across Sub-groups (Y-o-y, Per cent) Sources: NSO; and RBI staff estimates. sharp rise in inflation in the personal care and In terms of regional distribution, both rural effects sub-group. Sub-groups such as recreation and and urban inflation eased further to 1.7 per cent amusement, household goods and services, health, and 2.6 per cent, respectively, in June, with a transport and communication and education also greater fall witnessed in rural inflation. While recorded an increase in inflation. While clothing and state-level inflation rates varied between (-) 0.93 footwear recorded lower inflation, that of pan, per cent and 6.71 per cent, majority of the states tobacco and intoxicants, and housing remained experienced inflation of less than 4 per cent (Chart unchanged. III.13). Chart III.13: Spatial Distribution of Inflation: June 2025 (CPI-Combined) (Y-o-y, per cent) Inflation Range Number of States/UTs (In per cent) <2 15 2-4 16 4-6 4 6-8 2 Inflation Trend Number of States/UTs Decline 32 Stable 0 Increase 5 <2 2-4 4-6 6-8 Note: Map is for illustrative purposes only. Sources: NSO; and RBI staff estimates. RBI Bulletin July 2025 37ARTICLE State of the Economy Chart III.14: Prices of Essential Commodities a. Cereals b. Pulses Index (Jan 2024 = 100) Index (Jan 2024 = 100) 115 110 105 102.5 100 98.8 95 90 Wheat Rice Gram dal Tur/ Arhar dal Moong dal c. Vegetables d. Edible Oils Index (Jan 2024 = 100) Index (Jan 2024 = 100) Potato Onion Tomato Groundnut oil Mustard oil Sunflower oil Sources: Department of Consumer Affairs, GoI; and RBI staff estimates. 38 RBI Bulletin July 2025 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 52-luJ 250 200 150 129.0 118.0 100 75.2 50 0 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 52-luJ 120 110 104.5 100 95.5 90 80 80.2 70 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 52-luJ 130 123.1 120 118.6 110 100 100.7 90 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 52-luJ High frequency food price data for July so far Table III.6: Petroleum Products Prices (up to 18th) indicate a further decline in the prices Item Unit Domestic Prices Month-over- of pulses and some pick-up in prices of cereals. month (per cent) Edible oil prices firmed up in July so far vis-à-vis Jul-24 Jun-25 Jul-25^ Jun-25 Jul-25^ June, mainly due to an increase in mustard and Petrol ₹/litre 100.97 101.12 101.12 0.0 0.0 sunflower oil prices. The prices of palm oil, however, Diesel ₹/litre 90.42 90.53 90.53 0.0 0.0 continued to soften. Among key vegetables, potato Kerosene ₹/litre 46.65 40.19 43.03 -3.2 7.1 (subsidised) and tomato prices edged up further in July so far. LPG (non- ₹/cylinder 813.25 863.25 863.25 0.0 0.0 subsidised) Onion prices also registered a pickup reversing the Notes: 1. ^: For the period July 1-18, 2025. trend of correction witnessed since December 2024 2. Other than kerosene, prices represent the average Indian Oil (Chart III.14). Corporation Limited (IOCL) prices in four major metros (Delhi, Kolkata, Mumbai and Chennai). For kerosene, prices denote the average of the subsidised prices in Kolkata, Mumbai and Retail selling prices of petrol and diesel Chennai. Sources: IOCL; Petroleum Planning and Analysis Cell (PPAC); and RBI staff remained broadly unchanged in July (up to 18th). estimates. Kerosene prices firmed up after witnessing a fall The PMIs for June recorded a deceleration in the last month, while LPG prices remained unchanged rate of expansion of input prices for manufacturing (Table III.6). and services. Selling price pressures also moderatedState of the Economy ARTICLE for both services and manufacturing firms (Annex Chart III.15: Rural Nominal Wage Chart A4). (Y-o-y, per cent) 8.0 Rural labour wage growth continued to increase 7.5 7.6 in May 2025, driven by occupations in the non- 7.0 agricultural sector. Increase in non-agricultural 6.5 6.5 wage growth was primarily driven by occupations 6.0 including sweeping/cleaning, light motor vehicle 5.7 and tractor drivers, and mason workers. Agricultural 5.5 wage growth, however, has remained unchanged 5.0 compared to April 2025 (Chart III.15). 4.5 4.0 IV. Financial Conditions Overall financial conditions remained relatively easy in July (till July 18, 2025), with easier financial conditions prevailing across the money, G-sec and Source: Labour Bureau, Ministry of Labour and Employment. forex markets (Chart IV.1). collections and a decline in currency in circulation. System liquidity remained in surplus during Reflecting these developments, the average daily net June and July (up to July 18, 2025), driven by higher absorption under the liquidity adjustment facility government spending, lower-than-expected GST (LAF) stood at ₹3.13 lakh crore during the period June 13 The Financial Conditions Index (FCI) for India assesses the degree of relatively tight or easy financial market conditions with reference to its historical average since 2012. An FCI for India is constructed by using twenty financial market indicators at daily frequency for the period January 1, 2012, to July 9, 2025. The chosen indicators represent five market segments, namely (i) the money market; (ii) the G-sec market; (iii) the corporate bond market; (iv) the forex market; and (v) the equity market. For detailed methodology, refer to Bandyopadhyay, P., Kumar, A., Kumar, P. and Bhattacharyya, I. (2025), ‘Financial Condition Index for India: A High-frequency Approach’; Reserve Bank of India Bulletin, June, VOLUME LXXIX NUMBER 6. https://rbi.org.in/ Scripts/BS_ViewBulletin.aspx?Id=23451. RBI Bulletin July 2025 39 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM Average Rural Wage Non Agricultural Labourers Agricultural Labourers Chart IV.1: Daily Financial Conditions Index for India (Standard Deviation from Average since 2012) 1.0 0.5 0.0 -0.5 -1.0 -1.5 Money G-sec Corporate bond Equity Forex FCI standardised Notes: 1. A financial conditions index (FCI) is a summary measure that encapsulates the information contained in a broad array of financial variables13. The FCI provides a metric based on its historical average; in this context, a zero value of FCI corresponds to a financial system operating at the historical average level of all the financial indicators included in the FCI. To present the results, standardised FCI is used. 2. For detailed methodology, refer to Bandyopadhyay, P., Kumar, A., Kumar, P. and Bhattacharyya, I. (2025), ‘Financial Condition Index for India: A High-frequency Approach’; Reserve Bank of India Bulletin, June. https://rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=23451 Source: RBI staff estimates. 42-rpA-1 42-rpA-21 42-rpA-32 42-yaM-4 42-yaM-51 42-yaM-62 42-nuJ-6 42-nuJ-71 42-nuJ-82 42-luJ-9 42-luJ-02 42-luJ-13 42-guA-11 42-guA-22 42-peS-2 42-peS-31 42-peS-42 42-tcO-5 42-tcO-61 42-tcO-72 42-voN-7 42-voN-81 42-voN-92 42-ceD-01 42-ceD-12 52-naJ-1 52-naJ-21 52-naJ-32 52-beF-3 52-beF-41 52-beF-52 52-raM-8 52-raM-91 52-raM-03 52-rpA-01 52-rpA-12 52-yaM-2 52-yaM-31 52-yaM-42 52-nuJ-4 52-nuJ-51 52-nuJ-62 52-luJ-7 52-luJ-81 Tighter conditions Easier conditionsARTICLE State of the Economy Chart IV.2: Liquidity Operations (₹ lakh crore) 4.5 3.5 2.5 1.5 0.5 -0.5 -1.5 -2.5 -3.5 -4.5 Daily standing deposit facility Variable rate reverse repo Net liquidity adjustment facility Marginal standing facility Variable rate repo Total absorption Source: RBI. 16 to July 18, 2025, exhibiting a significant increase Money Market over ₹2.39 lakh crore during the period May 16 to Amidst large surplus liquidity, the weighted June 15, 2025 (Chart IV.2). On a review of the evolving average call rate (WACR) – the operating target of liquidity dynamics, the Reserve Bank conducted six monetary policy – hovered near the floor of the LAF variable rate reverse repo (VRRR) auctions of varying corridor. The spread of WACR over the policy repo maturities (2-day to 7-day), absorbing a cumulative rate averaged (-) 19 bps during the period June 16 to amount of ₹6.91 lakh crore from the banking system. July 18, 2025, similar to the spread recorded during In general, the auctions had a bid-offer ratio14 below the period May 16 to June 15, 2025 (Chart IV.3a). 1, i.e., the offered amount was lower than the Although there was a slight uptick in the WACR at notified amount, except for the two 7-day VRRR the end of June due to month-end and quarter-end auctions, conducted on July 4 and July 18, which elicited strong response from banks with bid-offer demand for liquidity, it subsequently eased in early ratios of 1.71 and 1.04, respectively. July and remained in the range of 5.26-5.33 per cent. It again rose momentarily in mid-July following the With liquidity conditions remaining easy, the Reserve Bank’s VRRR auctions. Overnight rates in the banks’ recourse to the marginal standing facility collateralised segments − the triparty and market (MSF) averaged ₹0.01 lakh crore during the second repo − moved in tandem with the WACR. half of June till mid-July, broadly similar to that during the period May 16 to June 15. Meanwhile, Following the recommendations of the Working with liquidity absorbed through VRRR auctions, the Group set up to undertake a comprehensive review average deployment in the standing deposit facility of trading and settlement timings of various markets (SDF) moderated to ₹2.26 lakh crore during June 16 regulated by it, the Reserve Bank, on June 25, 2025, to July 18, 2025 from ₹2.55 lakh crore during the announced changes in the market timings of both period May 16 to June 15, 2025. the collateralised and uncollateralised segment of 14 Amount of offers received/notified amount. the money market, to facilitate market development, 40 RBI Bulletin July 2025 42-voN-71 42-voN-62 42-ceD-50 42-ceD-41 42-ceD-32 52-naJ-10 52-naJ-01 52-naJ-91 52-naJ-82 52-beF-60 52-beF-51 52-beF-42 52-raM-50 52-raM-41 52-raM-32 52-rpA-10 52-rpA-01 52-rpA-91 52-rpA-82 52-yaM-70 52-yaM-61 52-yaM-52 52-nuJ-30 52-nuJ-21 52-nuJ-12 52-nuJ-03 52-luJ-90 52-luJ-81State of the Economy ARTICLE Chart IV.3: Policy Corridor and Money Market Rates a. Policy Corridor and Call Rate b. Money Market Rates (Per cent) (Per cent) 7.5 7.0 6.5 6.0 5.5 5.33 5.0 Tri-party repo Market repo Repo rate Marginal standing facility 3-month certificate of deposit 3-month treasury bill Weighted average call rate Standing deposit facility 3-month commercial paper (NBFC) Sources: RBI; CCIL; and Bloomberg. enhance price discovery, and optimise liquidity (10-year G-sec yield minus 91-day T-bills yield) requirements15. increased by 30 bps over the period May 16 to June 15, 2025, indicating a steepening of the yield curve Interest rates in the term money market also (Chart IV.4a and IV.4b). eased, with yields on 3-month treasury bills (T-bills), certificates of deposit, and 3-month commercial Corporate Bond Market papers issued by NBFCs moderating during the period Corporate bond issuances remained high at June 16 to July 18, 2025, as compared to the previous ₹1.87 lakh crore up to May 2025, nearly twice the month (Chart IV.3b). The average risk premium in funds raised up to May 2024. Corporate bond the money market – measured as the spread between yields generally rose while the corresponding risk 3-month commercial paper and 91-day T-bill yields – premia exhibited mixed trends across tenors and rose marginally to 81 bps during the current period rating spectrums during June 16 to July 11, 2025 from 77 bps in the preceding period. (Table IV.1). Government Securities (G-Sec) Market Money and Credit In the fixed income segment, bond yields moved Reserve Money, adjusted for the first-round with a moderate hardening bias especially across the impact of change in the cash reserve ratio (CRR), longer tenors during the period June 16 to July 18, witnessed marginally higher growth when 2025, as compared to the period May 16 to June 15, compared to a month ago.16 On the components side 2025. During the same time, the average term spread (liabilities), the growth in currency in circulation, 15 The market timings for call money transactions have been extended the largest component of reserve money, remained to 7:00 PM with effect from July 1, 2025. Accordingly, the revised market strong. On the sources side (assets), growth in hours are from 9:00 AM to 7:00 PM. The trading hours for market repo and triparty repo (Triparty Repo Dealing System or TREPS) transactions will be foreign currency assets decelerated.17 Gold – the extended to 4:00 PM with effect from August 1, 2025. Consequently, the revised trading hours will be from 9:00 AM to 4:00 PM. other major component of net foreign assets– grew, RBI Bulletin July 2025 41 42-voN-92 42-ceD-02 52-naJ-01 52-naJ-13 52-beF-12 52-raM-41 52-rpA-4 52-rpA-52 52-yaM-61 52-nuJ-6 52-nuJ-72 52-luJ-81 8.5 8.0 7.5 7.0 6.5 6.0 6.13 5.78 5.5 5.36 5.0 4.5 42-voN-92 42-ceD-02 52-naJ-01 52-naJ-13 52-beF-12 52-raM-41 52-rpA-40 52-rpA-52 52-yaM-61 52-nuJ-60 52-nuJ-72 52-luJ-81ARTICLE State of the Economy Chart IV.4: Developments in G-sec Market a. Movement in G-sec yield b. G-sec Yield Curve (Per cent) (Per cent, left scale; basis points, right scale) 7.3 7 6.7 6.4 6.31 5.95 6.1 5.8 5.80 5.5 Change (July 18, 2025 over June 18, 2025) (RHS) 3 year 5 year 10 year 18-06-2025 18-07-2025 Note: In chart b, the change in yield is on a point-to-point basis. Sources: Bloomberg; FBIL; and RBI staff estimates. mainly due to revaluation gains on gold prices. The strong momentum effect (Chart IV.6 and Annex Chart pace of expansion (y-o-y) in money supply (M ) was A5a). Scheduled commercial banks’ deposit growth21 3 marginally higher than a month ago (Chart IV.5).18,19 accelerated to 10.3 per cent (y-o-y) as on June 27, Credit growth of scheduled commercial banks20 2025 (10.1 per cent (y-o-y) a month ago), mainly due accelerated to 10.4 per cent (y-o-y) as on June 27, to strong momentum effect (Chart IV.6 and Annex 2025 (9.9 per cent (y-o-y) a month ago), mainly due Chart A5b). Table IV.1: Corporate Bonds - Rates and Spread Interest Rates Spread (bps) (Per cent) (Over Corresponding Risk-free Rate) Instrument May 16, 2025 – June 16, 2025 – Variation May 16, 2025 – June 16, 2025 – Variation June 15, 2025 July 17, 2025 June 15, 2025 July 17, 2025 1 2 3 (4 = 3-2) 5 6 (7 = 6-5) Corporate Bonds (i) AAA (1-year) 6.79 6.55 -24 112 94 -18 (ii) AAA (3-year) 6.85 6.93 8 100 96 -4 (iii) AAA (5-year) 6.94 7.16 22 92 97 5 (iv) AA (3-year) 7.66 7.87 21 176 186 10 (v) BBB- (3-year) 11.33 11.52 19 547 556 9 Note: Yields and spreads are computed as averages for the respective periods. Sources: Fixed Income Money Market and Derivatives Association of India; and Bloomberg. 16 7.7 per cent (y-o-y) as on July 11, 2025 (7.4 per cent (y-o-y) as on June 27, 2025). 17 Decelerated to 3.2 per cent (y-o-y) as on July 11, 2025, from 6.3 per cent (y-o-y) as on June 27, 2025. 18 Excluding the impact of the merger of a non-bank with a bank (with effect from July 1, 2023). 19 9.6 per cent (y-o-y) as on June 27, 2025, (9.5 per cent (y-o-y) a month ago). 20 Data are based on fortnightly Section 42 return. 21 Excluding the impact of the merger. 42 RBI Bulletin July 2025 42-voN-92 42-ceD-02 52-naJ-01 52-naJ-13 52-beF-12 52-raM-41 52-rpA-40 52-rpA-52 52-yaM-61 52-nuJ-60 52-nuJ-72 52-luJ-81 7.5 15 7.05 7.0 6.96 10 5 6.5 0 6.0 -5 5.5 -10 5.0 -15 1 3 5 7 9 11 31 51 71 91 Tenor (years)State of the Economy ARTICLE Chart IV.5: Growth in Reserve Money and Money Supply (Y-o-y, per cent, left scale; ratio, right scale) 12 5.8 11 5.7 10 9.6 9 5.6 8 5.5 7 7.7 6 5.4 5 4 5.3 Money multiplier (RHS) Reserve money (CRR adjusted) Money supply Source: RBI. Average bank credit growth continued to all sectors moderated on a y-o-y basis during May moderate across key sectors of the economy in 2025 compared to April 2025 (Annex Chart A6). Bank May 2025.22 As at end-May 2025, growth in non- credit to NBFCs, on a y-o-y basis, contracted in May food bank credit eased to 9.8 per cent (y-o-y) from 2025; however, NBFCs raised significant amount of 11.2 per cent (y-o-y) a month ago. Credit flows to debt from the capital markets via private placements. RBI Bulletin July 2025 43 42-naJ-21 42-beF-2 42-beF-32 42-raM-51 42-rpA-5 42-rpA-62 42-yaM-71 42-nuJ-7 42-nuJ-82 42-luJ-91 42-guA-9 42-guA-03 42-peS-02 42-tcO-11 42-voN-1 42-voN-22 42-ceD-31 52-naJ-3 52-naJ-42 52-beF-41 52-raM-7 52-raM-82 52-rpA-81 52-yaM-9 52-yaM-03 52-nuJ-02 52-luJ-11 Chart IV.6: Scheduled Commercial Banks: Credit and Deposit Growth (Y-o-y, per cent) 18 16 14 12 10.4 10 10.3 8 Credit growth Deposit growth Note: Scheduled commercial banks’ data are inclusive of regional rural banks. Data exclude the impact of the merger of a non-bank with a bank. Source: Fortnightly Section 42 Returns, RBI. 22 Sectoral non-food credit data are based on sector-wise and industry-wise bank credit (SIBC) return, which covers select banks accounting for about 95 per cent of total non-food credit extended by all scheduled commercial banks, pertaining to the last reporting Friday of the month. Data exclude the impact of the merger of a non-bank with a bank. 32-naJ-72 32-raM-01 32-rpA-12 32-nuJ-2 32-luJ-41 32-guA-52 32-tcO-6 32-voN-71 32-ceD-92 42-beF-9 42-raM-22 42-yaM-3 42-nuJ-41 42-luJ-62 42-peS-6 42-tcO-81 42-voN-92 52-naJ-01 52-beF-12 52-rpA-4 52-yaM-61 52-nuJ-72ARTICLE State of the Economy Personal loans, the main driver of banks’ credit During the current easing cycle (February-May growth, also recorded a sharp deceleration, largely 2025), the decline in weighted average lending rates due to a decline in the growth of other personal on both fresh and outstanding rupee loans was higher loans, vehicle loans and credit card outstanding. The for Public Sector Banks (PSBs) as compared to Private major contributor to the growth in personal loans Sector Banks (PVBs) [Chart IV.7a]. On deposit side, has been housing loans. While overall credit to the the weighted average domestic term deposit rates for industrial sector recorded a subdued growth due to fresh deposits declined significantly for both PSBs and a decline in credit growth to infrastructure, credit to PVBs (Chart IV.7b). Banks have also reduced their rates the MSME sector continued to remain buoyant. on savings deposit. Currently, the savings deposit Deposit and Lending Rates rates of some PSBs are prevailing at a historical low, since their de-regulation in 2011 (Chart IV.7c). In response to the 100-bps reduction in the policy repo rate since February 2025, banks have The rates on small savings schemes were adjusted their repo-linked external benchmark- kept unchanged by the Government of India based lending rates downward by 100 bps and during Q2:2025-26.23 The prevailing rates on these marginal cost of funds-based lending rate by 10 bps. instruments are higher than the formula-based rates Consequently, the weighted average lending rates by 33 - 118 bps. on fresh and outstanding rupee loans of scheduled Equity Markets commercial banks declined by 26 bps (domestic banks - 24 bps) and 18 bps (domestic banks - 16 bps), Notwithstanding intermittent volatility in the respectively, during February-May 2025 (Table IV.2). first half of June due to the Iran-Israel conflict, Indian On the deposit side, the weighted average domestic equity markets sustained gains in the second half of term deposit rates on fresh and outstanding deposits June 2025 on positive global cues amidst de-escalation moderated by 51 bps and 2 bps, respectively, during of geopolitical tensions in the Middle East and the the same period. easing of norms for infrastructure financing by the Table IV.2: Transmission to Banks’ Deposit and Lending Rates (Variation in bps) Term Deposit Rates Lending Rates Period Repo Rate WADTDR- WALR- WADTDR- 1-Yr. MCLR WALR - Fresh Outstanding EBLR Outstanding Fresh Deposits (Median) Rupee Loans# Deposits Rupee Loans (1) (2) (3) (4) (5) (6) (7) (8) Tightening Period +250 259 206 250 175 186 115 May 2022 to Jan 2025 Easing Phase -100 -51 -2 -100 -10 -26 -18 Feb 2025 to Jun* 2025 Notes: Data on EBLR pertain to 32 domestic banks. *: Data on WADTDR and WALR pertain to May 2025. #: Based on constant weights. WALR: Weighted Average Lending Rate, WADTDR: Weighted Average Domestic Term Deposit Rate, MCLR: Marginal Cost of Funds-based Lending Rate, and EBLR: External Benchmark-based Lending Rate. Source: RBI. 23 Department of Economic Affairs (Budget Division) - Ministry of Finance. (2025, June 30). Office Memorandum: Revision of interest rates for Small Savings Schemes - reg. https://dea.gov.in/sites/default/files/notification%2030.06.2025.pdf 44 RBI Bulletin July 2025State of the Economy ARTICLE Reserve Bank. In July, however, domestic markets the potential India-US trade agreement and mixed traded with a negative bias as investor sentiment corporate earnings results by companies in Q1:2025- remained cautious amidst ongoing uncertainty over 26 (Chart IV.8). Chart IV.8: Movements in Equity Markets (Indices (Jan 2024 = 100)) 140 130 125.4 120 123.9 110 114.0 100 90 80 Note: The average index values for January 2024 have been normalised to a base of 100. Data up to July 18, 2025. Source: Bloomberg; and RBI staff estimates. RBI Bulletin July 2025 45 42-naJ-1 42-beF-71 42-rpA-4 42-yaM-12 42-luJ-7 42-guA-32 42-tcO-9 42-voN-52 52-naJ-11 52-beF-72 52-rpA-51 52-nuJ-1 52-luJ-81 Chart IV.7: Transmission across Bank Groups (February 2025 - May 2025) a. Lending Rates b. Deposit Rate (Basis points) (Basis points) 0 10 5 0 -10 -3 -10 -20 -17 -15 -20 -20 -30 -30 -31 -40 -40 -41 -41 -50 -47 -50 -49 -60 -56 -52 -60 -70 WALR* WALR WADTDR WADTDR (Fresh rupee loans) (Outstanding rupee loans) (Fresh deposits) (Outstanding deposits ) PSBs PVBs Foreign banks PSBs PVBs Foreign banks c. Savings Deposit Rates of SCBs (Per cent) 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 Repo rate Minimum savings deposit rate Maximum savings deposit rate Notes: 1. Transmission during February to May 2025 is calculated by subtracting the weighted average lending and deposit rates of January 2025 from those of May 2025. 2. *: Based on constant weights. 3. Data on savings deposit rates pertain to five major banks and relate to account balances of up to ₹1 lakh. Source: RBI. BSE sensex BSE midcap BSE smallcap 91-naJ-40 91-rpA-50 91-luJ-50 91-tcO-40 02-naJ-30 02-rpA-30 02-luJ-30 02-tcO-20 12-naJ-10 12-rpA-20 12-luJ-20 12-tcO-10 12-ceD-13 22-rpA-10 22-luJ-10 22-peS-03 22-ceD-03 32-raM-13 32-nuJ-03 32-peS-92 32-ceD-92 42-raM-92 42-nuJ-82 42-peS-72 42-ceD-72 52-raM-82 52-nuJ-72ARTICLE State of the Economy Chart IV.9: India’s Balance of Payments (US$ billion, left scale; per cent, right scale) 50 1.5 1.3 40 1.0 30 20 0.5 0.5 10 0.0 0 -0.5 -10 -1.0 -20 -0.9 -1.0 -1.1 -1.1 -30 -1.5 -40 -1.3 -1.8 -50 -2.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2023-24 2024-25 Capital account balance (-deficit/+surplus) Change in reserves on a BoP casis (- increase/+ decrease) Current account balance (-deficit/+surplus) Current account balance to GDP ratio (RHS) Source: RBI. Resource mobilisation through initial public External Sources of Finance offerings showed a pick-up in recent months with Gross inward FDI amounted to US$ 7.2 billion improved sentiment in the secondary market, in May 2025, lower than US$ 8.7 billion in April supporting a recovery in primary market activity 2025 and US$8.1 billion in May 2024 (Chart IV.10a). (Annex Chart A7). Singapore, Mauritius, the UAE and the US together Balance of Payments accounted for more than three-fourths of total FDI India’s current account balance recorded a inflows in May 2025, with manufacturing, financial surplus of US$ 13.5 billion (1.3 per cent of GDP) in and computer services being the top recipient Q4:2024-25 as compared with a surplus of US$ 4.6 sectors. On the other hand, both repatriation of billion (0.5 per cent of GDP) in Q4:2023-24 owing FDI and outward FDI increased on a y-o-y basis. Top to higher net services exports in business and sectors for outward FDI included transport, storage computer services, and higher remittances (Chart and communication services, manufacturing, and IV.9). For the full year 2024-25, the current account financial, insurance and business services, and the deficit moderated to US$ 23.3 billion (0.6 per cent major destinations included Mauritius, the US and of GDP) from US$ 26.0 billion (0.7 per cent of GDP) the UAE (Chart IV.10b). Together, these movements during 2023-24. Higher net invisibles receipts in resulted in muted net FDI inflows of US$ 0.04 billion services and personal transfers primarily drove in May 2025, as against US$ 2.2 billion in May 2024. this improvement. In terms of external financing Foreign portfolio investment registered net needs, net capital flows fell short of financing the current account deficit owing to lower net inflows in inflows of US$2.4 billion in June 2025, driven by foreign direct investment (FDI) and foreign portfolio the equity segment (Chart IV.11). Equity inflows investment (FPI). This led to a depletion of US$ 5.0 rose due to enhanced global and domestic liquidity, billion in foreign exchange reserves (on a BoP basis) a weakening US dollar, alongside easing geopolitical during 2024-25. tensions. Financial services, oil, gas and consumable 46 RBI Bulletin July 2025State of the Economy ARTICLE Chart IV.10: Foreign Direct Investment Flows a. Gross and Net FDI b. Sector-wise Outward FDI (May 2025) (US$ billion) (US$ miliion) 100 50 10.2 0 1.0 4.0 3.9 -50 -100 Net outward FDI Repatriation/Disinvestment Gross FDI Net FDI Source: RBI. fuels, as well as automobile and auto components, Despite the slowdown, inflows outpaced outflows, emerged as the top recipient sectors. The debt resulting in positive net inflows of US$ 4.4 billion segment remained flat due to a global risk-off during April-May 2025 (Chart IV.12). Notably, sentiment and a weakening Indian Rupee (INR). nearly 48 per cent of the total external commercial External Commercial Borrowing registrations borrowings registered during this period were slowed to US$5.7 billion during April-May 2025, intended for capital expenditure (capex), including down from US$ 8.3 billion during April-May 2024. on-lending and sub-lending for capex. RBI Bulletin July 2025 47 42-3202 52-4202 52-4202 yaM-lirpA 62-5202 yaM-lirpA 0 100 200 300 400 Mauritius USA UAE Singapore Netherlands UK Chart IV.11: Foreign Portfolio Investments (US$ billion) 15 10 5 0 -5 -10 -15 Equity Debt Total Note: 1. Debt also includes investments under the hybrid instruments. 2. *: Data up to July 18. Source: National Securities Depository Limited (NSDL). 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ *52-luJ Chart IV.12: External Commercial Borrowings - Registrations and Flows (US$ billion) 12 8.3 8 5.7 4.4 4 2.7 1.7 1.2 0 -4 Registrations Net inflows Source: Form ECB, RBI. 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 42 yaM-rpA 52-yaM-rpAARTICLE State of the Economy As on July 11, 2025, India’s foreign exchange Chart IV.13: India’s Foreign Exchange Reserves reserves stood at US$696.7 billion, providing a cover (US$ billion, left scale; months, right scale) for more than 11 months of goods imports24 and for 95 per cent of the external debt outstanding at end- March 2025 (Chart IV.13). India’s external debt rose by US$ 67.5 billion from end-March 2024 to US$ 736.3 billion at end- March 2025, with the external debt-to-GDP ratio increasing marginally to 19.1 per cent from 18.5 per cent a year ago (Chart IV.14a). India’s key external vulnerability indicators fared well relative to other large emerging markets (Chart IV.14b). Foreign exchange reserves in US$ billion Import cover (RHS) India’s net International Investment Position Notes: 1. *: As on July 11, 2025. 2. The import cover data for June and July 2025 is based on total merchandise improved to US$ (-) 330 billion during Q4:2024- imports for 2024-25, as per the balance of payments statistics. Source: RBI. 25 from US$ (-) 364 billion during Q3:2024-25, on Chart IV.14: India’s External Vulnerability Indicators (Basis points) a. Indicators 120 100 An increase means An increase means 80 higher vulnerability lower vulnerability 60 40 20 0 -20 -40 External debt Short-term Debt service Reserves to Reserve cover Net IIP to to GDP ratio debt (residual ratio external debt of imports GDP ratio maturity) to ratio (months) reserves ratio 2013 2023 2024 2025 b. External Vulnerability Indicators: Cross-Country Comparison 200 160 120 80 40 0 Short term debt (original Reserves to external debt ratio External debt to GDP ratio maturity) to external debt ratio Brazil China India Russia South Africa Notes: 1. Data on external vulnerability ratios for India are for end-March 2025, end-September 2024 for China and Russia and end-December 2024 for Brazil and South Africa. 2. Data for Russia's reserves to external debt ratio are as on end-June 2024. Sources: RBI; Government of India; IMF; World Bank; and CEIC. 48 RBI Bulletin July 2025 7.696 750 14 11.5 12 650 10 8 550 6 4 450 2 350 0 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD 52-raM 52-nuJ *52-luJ 24 The import cover for goods and services was around nine months.State of the Economy ARTICLE Chart IV.15: Movement of Net International Investment Position, External Debt and Reserve Assets (US$ billion) 800 -300 -330 -320 600 -340 400 -360 200 -380 0 -400 External debt Reserve assets Net IIP (RHS) Source: RBI. the back of an expansion in reserves, outward Foreign Exchange Market FDI, and currency and deposits, which was The Indian Rupee (INR) depreciated by 0.8 per partially offset by an increase in inward FDI and cent (m-o-m) vis-à-vis the US dollar in June, due to the escalation of geopolitical tensions following the external debt liabilities (Chart IV.15). As a result, the Iran-Israel conflict, even as most EME currencies ratio of India’s international assets to international strengthened (Chart IV.16). Nevertheless, the INR liabilities improved to 77.5 per cent as of remained among the least volatile major EME March 2025. currencies. RBI Bulletin July 2025 49 3202 raM 3202 nuJ 3202 peS 3202 ceD 4202 raM 4202 nuJ 4202 peS 4202 ceD 5202 raM Chart IV.16: Movements in Major Currencies against the US Dollar in June 2025 (Per cent, m-o-m, left scale; per cent, right scale) 3 2 2 1 1 0 -1 0.5 -2 0 Percentage change (+ appreciation/ - depreciation) Volatility (RHS) Note: 1. Appreciation/depreciation (m-o-m) calculated using monthly average exchange rates. 2. US dollar (DXY) measures the movements of the US dollar against a basket of six major currencies (Euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc). 3. For each currency, volatility is measured as the coefficient of variation (100*Standard Deviation/Mean) using daily exchange rate data for June 2025. Sources: FBIL; Thomson Reuters; and RBI staff estimates. laer nailizarB oruE osep nacixeM now naeroK dnuop KU dnar nacirfA htuoS thab dnaliahT xednI ycnerruC EME haipur naisenodnI tiggnir naisyalaM nauy esenihC ney esenapaJ gnod esemanteiV rallod gnoK gnoH eepur naidnI osep enippilihP )YXD( ralloD SUARTICLE State of the Economy Chart IV.17: Movements in the 40-Currency Real Effective Exchange Rate a. Monthly Changes b. Decomposition of Monthly Changes (Index (2015-16 = 100), left scale; per cent, right scale) (Per cent) 110 4 108 106 2 104 100.4 102 100 0 98 -0.7 96 -2 94 92 90 -4 Change in REER (RHS) REER Change in REER Source: RBI. In June 2025, India’s inflation (on a m-o-m basis) additional sectors. The evolving pattern of global was 0.9 percentage points higher than the weighted trade flows and supply chains are far from settled. average inflation of its major trading partners. These uncertainties pose considerable headwinds to Despite this, the INR depreciated (m-o-m) in real global economic prospects. effective terms by 0.7 per cent as depreciation of Despite global uncertainties, the Indian the INR in nominal effective terms more than offset economy remains largely resilient, supported positive relative price differentials (Chart IV.17). by strong macroeconomic fundamentals. Easing V. Conclusion inflation, improving kharif season prospects, front-loading of government expenditure, targeted As intense negotiations are underway for closing fiscal measures and congenial financial conditions trade deals before the new import tariff rates kick in for faster transmission of rate reductions should from August 1, 2025, the focus is back on US trade support aggregate demand in the economy, going policies and their spillover effects globally. Financial forward. Amidst rising trade uncertainties and geo markets, however, seem to have taken trade policy economic fragmentation, building more resilient uncertainties in their stride, possibly reflecting trade partnerships presents a strategic opportunity optimism on reaching trade deals that are less for India to deepen its integration with global value disruptive to the global economy.25 Even so, under- chains. In addition, measures to accelerate domestic pricing of macroeconomic risk by financial markets investment in infrastructure and structural reforms remains a concern. The average trade tariff rates are aimed at improving competitiveness and productivity set to touch levels unseen since the 1930s. Moreover, would build resilience while supporting the growth risk of imposition of new high tariffs looms large for momentum.26 26 India Tapping New Markets, Taking to Reforms to Fight Trade Curbs: Nirmala Sitharaman. (2025, July 8). The Economic Times. 50 RBI Bulletin July 2025 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 4 2 0.9 0 -0.7 -2 -1.6 -4 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ Relative price effect Nominal exchange rate effect 25 Smith, I., and Herbert, E. (2025, July 10). Market Volatility Recedes as Investors Brush Off Donald Trump’s Tariff Threats. Financial Times.State of the Economy ARTICLE Annex Chart A1: Global Supply Chain Pressure Index (GSCPI) (Standard deviations from average value) 0.5 0.0 0.00 -0.5 -1.0 -1.5 Source: Federal Reserve Bank of New York. RBI Bulletin July 2025 51 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJARTICLE State of the Economy Chart A2:Inflation Gap (Actual minus Target) (Percentage points) Note: Inflation for the US is based on the US(PCE) data. Sources: Bloomberg; and RBI staff estimates. 52 RBI Bulletin July 2025State of the Economy ARTICLE Chart A3: Index of Supply Chain Pressures for India (Standard deviations from average) 3 2 1 0 -0.07 -1 -2 -3 Source: RBI staff estimates. RBI Bulletin July 2025 53 11-raM 11-ceD 21-peS 31-nuJ 41-raM 41-ceD 51-peS 61-nuJ 71-raM 71-ceD 81-peS 91-nuJ 02-raM 02-ceD 12-peS 22-nuJ 32-raM 32-ceD 42-peS 52-nuJ Chart A4: PMI: Input and Output Prices a. Manufacturing b. Services Index (50=No change) Index (50=No change) 60 56 53.9 52 51.7 48 Input Prices Output Prices Input Prices Output Prices Note: A level of 50 corresponds to no change in activity and a reading above 50 denotes expansion and vice versa. Source: S&P. 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 60 56 52.6 52 52.3 48 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJARTICLE State of the Economy Chart A5: Scheduled Commercial Banks: Credit and Deposit Growth a. Credit b. Deposit (Percentage points) (Percentage points) 3 2 1.0 1 0 -1 -2 -1.2 -3 Credit momentum effect Credit base effect Deposit momentum effect Deposit base effect Note: Scheduled commercial banks’ data are inclusive of regional rural banks. Data exclude the impact of the merger of a non-bank with a bank. Source: Fortnightly Section 42 Returns, RBI. 54 RBI Bulletin July 2025 42-nuJ-82 42-luJ-62 42-guA-32 42-peS-02 42-tcO-81 42-voN-51 42-ceD-31 52-naJ-01 52-beF-7 52-raM-7 52-rpA-4 52-yaM-2 52-yaM-03 52-nuJ-72 3 2 1.6 1 0 -1 -2 -1.9 -3 -4 42-nuJ-82 42-luJ-62 42-guA-32 42-peS-02 42-tcO-81 42-voN-51 42-ceD-31 52-naJ-01 52-beF-7 52-raM-7 52-rpA-4 52-yaM-2 52-yaM-03 52-nuJ-72State of the Economy ARTICLE Chart A6: Sectoral Deployment of Bank Credit (Y-o-y, per cent) a. Agriculture Credit b. Industry Credit 25 20 15 10 5 7.5 0 c. Services Credit d. Services Credit - NBFC e. Personal Credit f. Personal Credit - Housing Notes: 1. Data are provisional. Sectoral non-food credit data is based on sector-wise and industry-wise bank credit (SIBC) return, which covers select banks accounting for about 95 per cent of total non-food credit extended by all SCBs, pertaining to the last reporting Friday of the month. The bank groups covered under the SIBC return are - Public Sector Banks, Private Sector Banks, Foreign Banks, and Small Finance Banks. 2. Data exclude the impact of the merger of a non-bank with a bank. Source: RBI. RBI Bulletin July 2025 55 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 12 10 8 6 4 4.9 2 0 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 30 25 20 15 10 9.4 5 0 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 40 35 30 25 20 15 10 5 0 -5 -0.3 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 25 20 15 13.7 10 5 0 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 25 20 15 13.8 10 5 0 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaMARTICLE State of the Economy Chart A7: Amount Raised Through Initial Public Offerings (₹ crore) 40000 35000 30000 25000 20000 15000 10000 5000 0 Notes: 1. IPOs are classified based on listing date. 2. Data up to July 18, 2025. Sources: SEBI; and Capitaline. 56 RBI Bulletin July 2025 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJRevisiting the Oil Price and Inflation Nexus in India ARTICLE Revisiting the Oil Price and Since the pandemic, the global economy has experienced large gyrations in crude oil prices. From Inflation Nexus in India an average of US$ 59 per barrel in 2019-20, crude prices fell to US$ 44 per barrel in 2020-21 owing to the by Sujata Kundu, Soumasree Tewari and pandemic-induced global lockdown.1 Subsequently, Indranil Bhattacharyya^ with resumption of economic activity and recovery in demand, global oil prices increased by around 79 In recent years, India’s net import demand for per cent to US$ 78 per barrel in 2021-22 and further to US$ 93 per barrel in 2022-23. The lingering impact of crude oil has remained strong, fuelled by consumption the pandemic, protracted geopolitical tensions since growth and robust economic activity. In the backdrop of the Russia-Ukraine war along with sanctions imposed volatile global crude prices and a less regulated petrol on Russian oil exports led to a significant surge in oil and diesel prices regime, this paper reassesses the impact price volatility. From above US$ 90 per barrel during of international crude oil price movements on headline 2023-24, international crude oil prices fell below US$ inflation. The results suggest that a 10 per cent rise in 70 per barrel beginning 2025-26. global crude oil prices could increase inflation by around 20 basis points. Although the passthrough to retail India, being a net oil importer, has remained prices has remained contained with active government susceptible to the vagaries of global crude oil prices intervention, increasing dependence on crude oil imports and has been actively intervening in the domestic may have inflationary consequences in the long run, fuel market to contain the adverse fallout of higher warranting constant vigilance and careful monitoring oil prices on domestic inflation and output. With of its potential impact. imports constituting more than 85 per cent of India's crude oil requirements and the benchmarking of Introduction domestic pump prices to international prices, fuel The oil price-inflation relationship has been a (including petrol and diesel) prices in the consumer vexing issue for economists and central bankers for price index-combined (CPI-C) may impact headline more than half a century. Since the twin oil price inflation, both directly and indirectly, through higher shocks of the 1970s, economists have endeavoured cost of inputs and transportation across regions.2 to delineate the impact of oil price shocks on In order to contain the spillover effect on domestic aggregate economic activity. This is particularly prices, government has revised excise duties from important for oil importers as oil price surges have time to time. often been associated with a downturn in economic At the onset of the pandemic in 2020, fiscal growth and worsening trade and current account measures in the form of higher taxes on domestic balances. Generally, oil price fluctuations can be pump prices were announced to fund pandemic- highly distortionary as adverse shocks (higher oil related expenditure. In 2021, however, as prices) can ratchet up inflation and unhinge inflation international oil prices rose sharply, excise duties expectations. Therefore, monetary authorities – more on petrol and diesel were reduced by 15 per cent so in inflation targeting (IT) economies – are keen observers of the evolving oil price dynamics. 1 In April 2020, average international crude prices stood at US$ 21 per barrel (US$ 32 per barrel in March 2020), which was the lowest since ^ The authors are from the Reserve Bank of India. The views expressed in January 2016 (US$ 29.8 per barrel). this article are those of the authors and do not represent the views of the 2 Petrol prices were de-regulated in India in July 2010, while diesel prices Reserve Bank of India. were de-regulated in October 2014. RBI Bulletin July 2025 57ARTICLE Revisiting the Oil Price and Inflation Nexus in India and 32 per cent, respectively, in November 2021. the study seeks to answer the following questions: The spike in energy prices since the Russia-Ukraine (i) what is the long run impact of oil price dynamics conflict in 2022 resulted in a direct as well as second- on India’s inflation?; and (ii) how large has been the round price pressures on CPI inflation. To contain impact of the post-pandemic oil price movements on the spillover of the oil price shock, excise duties on inflation?. While previous studies on India are based petroleum products were further reduced by 28 per on the wholesale price index (WPI) (Mandal et al., cent in May 2022, resulting in a cumulative reduction 2012), recent studies have analysed the passthrough of 43 per cent and 60 per cent on petrol and diesel, of crude oil price to CPI-C3 inflation and the role of respectively, since November 2021, which modulated fuel taxes in limiting this passthrough (Benes et al., the passthrough on domestic inflation. 2016; John et al., 2023). In this context, this paper revisits the crude oil-domestic price relationship The existing literature suggests a positive but using a sample spanning 2009-10 to 2023-24 and varied impact of oil price movements on inflation estimating the impact using a suite of models. The across economies. Moreover, the passthrough results indicate that a 10 per cent rise in global crude has weakened since the mid-eighties which has oil price could increase India’s headline inflation by been attributed to effective anchoring of inflation around 20 basis points. Notably, government excise expectations by central banks through the adoption duties of petroleum products play a crucial role in of IT frameworks (Mishkin, 2007; Choi et al., 2018; López-Villavicencio and Pourroy, 2019). Following the determining the impact. Nevertheless, the impact surge in crude prices after the global financial crisis of crude oil price may lead to inflationary pressures (GFC), prices dropped significantly from an average in the long run, particularly in the post-pandemic of US$ 102 per barrel during 2011-14 to an average of period with supply chains coming under increasing US$ 49 per barrel during 2015-17 – the latter period stress from geopolitical disturbances and conflicts. being coincidental with the adoption of IT by some The remaining part of the paper is structured emerging market economies (EMEs), including India. as follows. Section 2 provides a brief review of the The current global economic scenario, characterised related literature, while stylised facts on oil prices in by increasing trade fragmentation, supply chain the Indian context are set out in Section 3. The data, disruptions and intensifying tariff wars, can shrink methodology and empirical findings are discussed global trade sharply and thereby derail global growth. in Section 4, while section 5 presents concluding The resultant oil price volatility can be debilitating observations while drawing some policy perspectives. for the Indian economy at this stage. Since India II. Related Literature has largely deregulated domestic petrol and diesel prices with intervention from time to time aimed Globally, oil price shocks have been a major at stabilising inflation while supporting growth, it is driver of inflation, and the related literature is vast, pertinent to analyse the recent dynamics of oil prices analysing various potential channels of passthrough and its impact on inflation. and its dynamics. For oil importing countries like India, oil price shocks are one of the major channels Against this backdrop, the paper attempts to re- of global spillovers. According to the World Economic assess the impact of global crude oil price movements on headline inflation, given that sudden oil price 3 India formally adopted the flexible IT framework in June 2016. Inflation, surges can impact the undergoing disinflation as measured by the CPI-C, is the nominal anchor under this framework with the inflation target set at 4 (+/- 2) per cent indicating upper and lower process and thwart policy normalisation. Specifically, tolerance thresholds of 6 per cent and 2 per cent, respectively. 58 RBI Bulletin July 2025Revisiting the Oil Price and Inflation Nexus in India ARTICLE Outlook (WEO), the peak passthrough from a 1 The relevant literature in the Indian context is percentage point increase in energy prices into CPI limited. When passthrough is incomplete, a 10 per inflation at the country level historically was about cent rise in oil prices in the short run is found to 0.06 percentage point in advanced economies and 0.17 increase inflation by 0.3 per cent, whereas it raises percentage point in emerging market and developing inflation by 0.6 per cent under complete passthrough. economies (IMF, 2024). However, the passthrough The impact, however, diminishes in the medium depends on several factors and varies across sectors run (Bhanumurthy et al., 2012). Moreover, complete and economies based on their macroeconomic deregulation of oil prices may result in a significant structure, monetary policy credibility and extent of surge in inflation as domestic prices adjust more trade openness (Chen, 2009; Baba and Lee, 2022). frequently to international prices, particularly The surge in global crude oil prices in the post- during an adverse oil price shock (Mandal et al., COVID period led to an increase in inflation of energy 2012). According to the RBI’s quarterly projection dependent sectors that resulted in generalisation of model (QPM 2.0), the direct effect of an increase in inflation across countries. However, the magnitude oil prices on petrol, diesel, LPG and kerosene prices of the impact was observed to be limited in countries could be further compounded by second round with higher fuel excise taxes. Oil price changes effects on inflation through depreciation of the INR. brought about by demand and supply shocks, Consequently, an increase in oil prices by 10 per however, have limited impact on actual and expected cent could result in an increase in inflation by 30 inflation; instead, the latter is found to be more basis points at its peak (John et al., 2023). Moreover, influenced by shocks to economic activity (Aastveit fuel taxes in India also play an important role in et al., 2023). Nevertheless, well-anchored inflation thwarting complete passthrough of oil price changes expectations, credible monetary policy and lower to domestic inflation (Benes et al., 2016). As fuel taxes energy imports are important in limiting the impact are exogenous and non-reverting in the absence of (Choi et al., 2018; Baba and Lee, 2022). policy intervention, its impact on inflation remains While the short run effects of gasoline price entrenched. shocks on headline inflation in the US are sizable, III. Stylised Facts they have limited effects on long run inflation expectations (Kilian and Zhou, 2023). The passthrough Oil prices are sensitive to geopolitical and large- in the US is more from direct channels in the short scale macroeconomic events, driven by both demand run but predominantly through the indirect channel and supply factors. The volatility of oil prices and its in the long run (Yilmazkuday, 2021). However, the responsiveness to sudden events is inherent due to passthrough in the US and the Euro area is significant the inelastic nature of both supply and demand to in the case of core inflation through the common price changes in the short run. effect of oil price shocks rather than through III.1 Global oil price shocks and oil inflation disaggregated commodity prices (Conflitti and Luciani, 2019). Furthermore, the pricing mechanism Since the early 1990s, global crude oil and exchange rates are the key factors impacting the price dynamics have been shaped by various degree of passthrough to retail fuel prices (Kpodar episodes of geopolitical and geoeconomic significance and Imam, 2021). (Chart 1). RBI Bulletin July 2025 59ARTICLE Revisiting the Oil Price and Inflation Nexus in India Chart 1: Movements in Global Crude Oil Price (US$ per barrel) 180 160 140 120 100 80 60 40 20 0 Note: The price represents West Texas Intermediate (WTI) price; OPEC represents Organisation of the Petroleum Exporting Countries. Source: Energy Information Administration (EIA). While positive shocks, mainly originating from to early 2015 was primarily driven by supply factors, the geographical concentration of source and supply including shale production and policy-shifts by the dynamics of oil exporting countries, are more Organisation of the Petroleum Exporting Countries frequent and sharper than negative shocks, the latter (OPEC). Slowdown in demand also played a role in have also occurred due to demand contraction and keeping prices moderate, particularly from mid- entry of new entities such as the US shale in recent 2015 to early-2016. The unprecedented volatility years (Chart 2). The fall in oil prices from mid-2014 in oil prices during the pandemic was driven by 60 RBI Bulletin July 2025 7891 8891 9891 0991 1991 2991 3991 4991 5991 6991 7991 8991 9991 0002 1002 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 2102 3102 4102 5102 6102 7102 8102 9102 0202 1202 2202 3202 4202 Iraq Asian Russia - invasion Financial Global Ukraine Crisis Financial COVID led war Crisis fall in oil demand Attack on World Trade Centre, US Production target cut by OPEC Chart 2: Shock Episodes in Crude Oil Prices* (Per cent) 250 200 150 100 50 0 -50 -100 Note: * Shock is defined as one standard deviation from long-term average. Sources: Bloomberg and authors’ calculations. 21-rpA 21-voN 31-nuJ 41-naJ 41-guA 51-raM 51-tcO 61-yaM 61-ceD 71-luJ 81-beF 81-peS 91-rpA 91-voN 02-nuJ 12-naJ 12-guA 22-raM 22-tcO 32-yaM 32-ceD 42-luJ 52-beF Positive shock Negative shock Year-on-Year growth in crude oil price (Indian basket)Revisiting the Oil Price and Inflation Nexus in India ARTICLE both demand and supply factors as the historic dip Chart 3: India's Real GDP Growth and Energy Consumption in 2020, driven by global lockdown of economic (Per cent) 20 activity and logistics, was followed by a sharp upward 15 correction with increased demand from resumption 10 of normal activity. Consequently, price of crude oil 5 (Indian basket) fell below US$ 20 per barrel during April 2020 before rising sharply in 2021, with global 0 petrol demand surpassing its supply. The slow pace -5 of supply recovery was primarily on account of OPEC -10 plus production cuts that started in late 2020. Russia’s -15 invasion of Ukraine in February 2022 led to a further disruption in the global oil market as Russia is a major exporter. Brent crude oil, the price benchmark for global crude, scaled historic peaks during that period Note: Energy intensity is defined as the amount of energy consumed for producing one unit of GDP. (since June 2008). The supply shocks emanating Sources: Ministry of Statistics and Programme Implementation (MoSPI) and Petroleum Planning and Analysis Cell (PPAC). from global conflicts and imposition of sanctions resulted in elevated oil prices. Intermittent dip investment in natural gas, petroleum and refineries in prices seen in the recent period is primarily on sector along with promotion of renewable sources account of slowdown in demand amidst increasing of energy, such as wind, solar and nuclear energies, supply, as also the increased supply of renewable and alternate fuels like ethanol, biogas, biodiesel energy.4 However, persistent geopolitical turmoil, and natural gas that facilitate energy efficiency and growing geoeconomic fragmentation and heightened conservation.5 While concerted efforts towards uncertainties have resulted in a significant volatility transition to renewable and non-fossil fuels have in global crude oil prices. reduced energy intensity of output, faster increase in consumption demand relative to domestic supply III.2 Oil price dynamics and India’s inflation has raised India’s import dependency for crude oil Oil and gas, having strong forward linkages from 77.6 per cent in 2013-14 to 88.2 per cent in in India, is one of the core sectors. With a robust 2024-25 (compound annual growth rate (CAGR) of 1.1 growth momentum, oil demand for production per cent) [Chart 4]. and transportation across sectors have increased According to the International Energy Agency consistently over the years, underscoring a strong (IEA), India will be the largest consumer of crude oil relationship between growth and energy demand with its oil demand expected to increase by almost (Chart 3). Fuelled by strong consumption growth, 1.2 million barrels per day (mb/d) over 2023-2030, robust economic activity and a stagnant domestic accounting for more than one-third of the projected supply of oil, net import demand for crude oil has 3.2 mb/d global gains due to rapid increase in remained strong. manufacturing, commerce, transport and agricultural To address the growing energy deficit, policies sectors (IEA, 2024). A fall in domestic supply due to have been aimed at boosting domestic production, slowdown in new discoveries along with a rise in reducing crude oil import dependency through higher 5 Some of the policies include Production Sharing Contract (PSC) regime, 4 India also benefitted from the diversification of its import destinations Discovered Small Field Policy, Hydrocarbon Exploration and Licensing of crude oil, with Russia gaining a major share. Policy and Setting up of National Data Repository. RBI Bulletin July 2025 61 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 42-3202 52-4202 GDP at 2011-12 prices Per capita energy consumption Energy intensityARTICLE Revisiting the Oil Price and Inflation Nexus in India oil price movements impact domestic inflation. In Chart 4: India's Crude Oil Import Dependency (Per cent of Consumption) India, deregulation of petrol prices in 2010 and diesel 90 88.2 prices in 2014 was implemented to reflect a greater 88 passthrough of global crude oil price movements 86 to domestic fuel prices. With a weight of around 9 84 per cent in CPI-C basket, fuel and light, including 82 petrol and diesel, impacts headline inflation through 80 77.6 both direct and indirect channels. A rise in fuel cost 78 generally manifests in higher transportation and 76 input costs resulting in cross-sectional spillovers and 74 increase in core inflation (headline inflation excluding 72 food and fuel components). The co-movement of 70 domestic fuel inflation and oil prices is evident as the correlation has increased considerably post-2010, reflecting higher passthrough. However, government Source: PPAC. policies including excise duties and taxes have muted demand could further increase India’s oil demand- the impact even after deregulation, thus containing supply gap resulting in higher import dependency. the spillover of global oil price shocks to domestic Thus, continuing vulnerability to global crude oil inflation (Chart 5). price shocks has important ramifications for India’s The incomplete passthrough of crude oil prices growth and inflation. to petrol and diesel inflation and indirectly through Oil importing countries are generally price takers costs of transportation, primarily on account of in the global market. In view of this, domestic policies government intervention, is evident in the post- have implications for the extent to which global crude deregulation period (Charts 6a and b). In 2020, despite 62 RBI Bulletin July 2025 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 42-3202 52-4202 Chart 5: Trend in Crude Oil Price and Domestic Fuel Inflation (Per cent) 250 25 200 20 150 15 100 10 50 5 0 0 -50 -5 -100 -10 Sources: MoSPI and Bloomberg. 20-rpA 30-raM 40-beF 50-naJ 50-ceD 60-voN 70-tcO 80-peS 90-guA 01-luJ 11-nuJ 21-yaM 31-rpA 41-raM 51-beF 61-naJ 61-ceD 71-voN 81-tcO 91-peS 02-guA 12-luJ 22-nuJ 32-yaM 42-rpA 52-raM July 2010: Petrol prices October 2014: Diesel deregulated prices deregulated Crude oil price (Indian basket) Fuel inflation [RHS]Revisiting the Oil Price and Inflation Nexus in India ARTICLE Chart 6: Crude Oil Price Passthrough in the Post-Deregulation Period a. Petrol and Diesel Inflation b. Contribution of Transportation in Core CPI (Per cent) (Per cent, left scale; percentage point, right scale) 250 30 25 200 20 150 15 100 10 50 5 0 0 -5 -50 -10 -100 -15 Crude oil price (Indian basket) Contribution of transportation inflation (8.5 per cent) [RHS] CPI petrol+diesel (2.3 per cent) [RHS] Crude oil price (Indian basket) Note: 1. Transportation in chart b is a weighted index of all components of transport in the CPI-C basket, excluding petrol and diesel prices. 2. Figures in parentheses indicate weight in CPI-C and core CPI in Charts a and b, respectively. 3. Item-wise data for March, April and May 2020 are not available. Sources: MoSPI and authors’ estimates. global crude oil price moderating to a historical low, IV. Empirical Analysis and Results fuel inflation remained high with higher duties of IV.1 Phillips curve estimates ₹13 per litre and ₹16 per litre announced on domestic To examine the impact of global crude oil price pump prices for petrol and diesel, respectively, to changes on India’s headline inflation, a Phillips finance pandemic-related expenditure. With sharp Curve (PC) estimation framework, widely used in increase in global energy prices in 2021, however, excise duties on petrol and diesel were reduced by modelling and forecasting inflation, is deployed. ₹5 per litre and ₹10 per litre, respectively. The spike In this regard, the New Keynesian Phillips Curve in energy prices since the Russia-Ukraine conflict in (NKPC) is, generally, the standard tool of analyses February 2022 led to a persistent direct impact on (Nason and Smith, 2008; Dees et al., 2009). From this domestic headline inflation as well as second-round perspective, this exercise estimates (i) the backward- pressures, which led to a further reduction in duties looking triangle model in reference to the three basic by ₹8 per litre and ₹6 per litre in petrol and diesel, determinants of inflation in the model – inertia, respectively, in May 2022. demand and supply-side factors (Gordon and Stock, 1998); and (ii) a hybrid NKPC which incorporates both Unless retail fuel prices change, there is no direct forward and backward-looking components, based impact of higher international oil prices on CPI. on the related literature (Gali and Gertler, 1999; However, persistent increase in oil price can impact Patra, et al., 2014). More precisely, the following WPI and core (excluding food and fuel) in the form of higher transportation and input costs. It also has specifications are estimated: the potential to unhinge inflation expectations, thus π α β π β X β X β Z ε (1) t t tk tk tk t changing the inflation path. Higher energy prices 1 1 -1 2 - 3 - 4 - π= α + β π + β X +β ∆(X ) +β Z + β E π ε ...(2) can raise inflation expectations of consumers and t t tk tk tk t t t 1 1 -1 2 - 3 - 4 - 1 +1 businesses, indirectly exerting pressure on food and w=h ere+, π is+ t h e m+ ea s∆u(re )o +f in fl a+t i(o1n– a)t t im+e pe.r.i.od t core inflation. t, X is the measure of domestic economic activity t RBI Bulletin July 2025 63 51-rpA 51-voN 61-nuJ 71-naJ 71-guA 81-raM 81-tcO 91-yaM 91-ceD 02-luJ 12-beF 12-peS 22-rpA 22-voN 32-nuJ 42-naJ 42-guA 52-raM 200 1.1 0.9 150 0.7 100 0.5 50 0.3 0.1 0 -0.1 -50 -0.3 -100 -0.5 51-naJ 51-yaM 51-peS 61-naJ 61-yaM 61-peS 71-naJ 71-yaM 71-peS 81-naJ 81-yaM 81-peS 91-naJ 91-yaM 91-peS 02-naJ 02-yaM 02-peS 12-naJ 12-yaM 12-peS 22-naJ 22-yaM 22-peS 32-naJ 32-yaM 32-peS 42-naJ 42-yaM 42-peS 52-naJ 52-yaMARTICLE Revisiting the Oil Price and Inflation Nexus in India represented by domestic output gap [((actual output of the backward-looking terms (lags of price changes) - potential output)/potential output6)*100], stands are greater than the coefficient of the forward- for first difference and Z is a vector of supply-side looking term, i.e., inflation expectations, in hybrid t ∆ factors such as global crude oil price, global non-fuel PC estimations, thereby indicating the overbearing price, rainfall deviation from normal and exchange influence of lagged price changes, i.e., inflation rate movements; E π is the expected inflation inertia. The measure of economic activity – real output t t and is proxied by one-+y1ear ahead median inflation gap (3 quarters before) as well as the change in output expectations of the households; is the error term gap – are found to be positive and significant across and k represents the time lags. Atll variables, except specifications suggesting the key role of demand. ε rainfall deviation from long period average (LPA), However, less than proportional impact of output are de-seasonalised using the standard X-13 ARIMA gap on inflation (lower coefficient value) indicates procedure. The presence of unit roots in the variables lower degree of flexibility in price adjustment. is examined by employing the augmented Dickey- Importantly, the impact coefficient of crude oil price Fuller test and the test results are presented in Annex change is 0.02 and statistically significant, indicating Table A1. Change in output gap – X – is considered t that a one per cent change in international crude to capture the possibility of speed limit effects (Fisher ∆( ) oil price may lead to around 0.02 per cent increase et al., 1997; Malikane, 2014; Jose et al., 2021)7. The in domestic CPI on a contemporaneous basis. In coefficients, and , therefore, provide measures other words, the results indicate that a 10 per cent of the flexibili2ty in p3rice adjustment. All variables, β β increase in international crude oil prices could barring inflation expectations (in percentage), were increase India’s headline inflation by around 20 basis converted to their natural logarithms to stabilise points contemporaneously.8 Exchange rate and global their variances. non-fuel prices are also found to have a bearing on The estimations are done on quarterly data headline inflation. for the sample period 2009-10 to 2023-24 with the IV.2 Time-varying nature of impact quarter-on-quarter (q-o-q) change in headline CPI-C as the dependent variable, using a suite of econometric While the above models estimate the techniques such as the ordinary least squares contemporaneous impact of oil price changes to (OLS) regression, constrained linear regression and domestic inflation, it is important to recognise that generalised method of moments (GMM). The final the impact would essentially be time-varying. As oil form of the equations is derived by starting with a prices are highly volatile and are responsive to a host general form with several lags of the output gap of factors and sudden events, including news items, and choosing an appropriate model, based on the straddling the global economic landscape, their impact significance of relevant coefficients and overall fit. on domestic consumer prices would be conditioned by the prevailing global and domestic macroeconomic Results indicate that the backward-looking terms conditions and policies. Therefore, to study the are statistically significant with the expected positive time-varying nature of the impact, rolling regression sign across specifications (Table 1). The coefficients based on the hybrid-PC equation (without parameter 6 Proxied by Hodrick-Prescott (HP) filtered trend series of actual real GDP. constraints) has been estimated for the time period 7 The speed limit suggests that for a given level of economic activity, more rapid changes in the latter may cause larger changes in inflation (Fuhrer, 1995). 8 The results are consistent with the existing literature (RBI, 2018). 64 RBI Bulletin July 2025Revisiting the Oil Price and Inflation Nexus in India ARTICLE Table 1: Phillips Curve (PC) Estimation – Quarterly Data Explanatory Variables Dependent Variable: ln CPI t OLS Constrained GMM without GMM with ∆( ) Regression9 Linear Regression Parameter Constraints Parameter Constraints Backward-looking PC Hybrid PC - 1 Hybrid PC - 2 Hybrid PC Hybrid PC - 1 Hybrid PC - 2 (1) (2) (3) (4) (5) (6) (7) Constant 0.006*** -0.005 -0.0002 -0.01** -0.005 -0.0002 (0.002) (0.004) (0.006) (0.003) (0.004) (0.01) lnCPI 0.21** 0.15* 0.41*** 0.03 0.15** 0.41*** t (0.11) (0.08) (0.11) (0.09) (0.07) (0.10) –1 ∆( ) ln CPI 0.36*** 0.35*** 0.59*** 0.25*** 0.35 0.59*** t (0.07) (0.08) (0.11) (0.08) (-) (0.10) –2 ∆( ) Domestic Output Gap 0.01** 0.01*** 0.01*** 0.01*** 0.01*** 0.01*** t (0.003) (0.002) (0.002) (0.001) (0.001) (0.002) –3 ( ) Domestic Output Gap 0.002 0.002** 0.002* 0.002** 0.002** 0.002** t (0.001) (0.001) (0.001) (0.001) (0.001) (0.001) –1 ∆( ) ln Global Crude Oil Price 0.02*** 0.02*** 0.02*** 0.02*** 0.02*** 0.02*** t (0.01) (0.01) (0.01) (0.005) (0.005) (0.01) ∆( ) ln Global Non fuel Price 0.03*** 0.05*** 0.04* 0.05*** 0.05*** 0.04** t (0.01) (0.02) (0.02) (0.01) (0.01) (0.02) –6 ∆( ) ln Rainfall Deviation 0.0004 0.001 0.0003 0.001 0.001 0.0003 t (0.001) (0.001) (0.001) (0.001) (0.001) (0.001) –1 ( ) ln Exchange Rate 0.03 0.06** 0.02 0.08*** 0.06*** 0.02 tt t t (0.04) (0.03) (0.04) (0.02) (0.02) (0.03) ; -6; -6; -6 ∆( ) Inflation Expectations - 0.001*** -0.0001 0.001*** 0.001*** -0.0001 t (0.0003) (0.0005) (0.0003) (0.0003) (-) ( ) No. of Observations (adj.) 61 61 61 61 61 61 Sample Period (adj.) 2009Q3-2024Q3 2009Q3-2024Q3 2009Q3-2024Q3 2009Q3-2024Q3 2009Q3-2024Q3 2009Q3-2024Q3 Adjusted R-squared 0.54 - - - - - Root MSE - 0.006 0.007 - - - F-Statistic 6.93*** F(9,48) = F(9,48) = - - - 305.10*** 83.60*** Notes: *, ** and *** represent significance levels at 10 per cent, 5 per cent and 1 per cent, respectively. 1. Figures in parentheses indicate robust standard errors. 2. Separate period dummies for appropriate quarters (primarily 2009-10 – post-global financial crisis pickup in global commodity prices; 2013-14 – exchange rate fluctuations during the taper tantrum episode and sharp fall in output gap; 2014-15 – sharp fall in inflation expectations; 2015- 16 – sharp improvement in demand conditions; 2020-21 – pandemic-led sharp drop in output gap; 2022-23 – Ukraine war) were incorporated in the specifications as exogenous variables to capture episodic events. 3. Hybrid PC -1 includes the following constraint: sum of coefficients associated with the backward-looking terms of CPI at lags 1 and 2 = 0.5. This has been done to derive the model-determined coefficient of the forward-looking term (inflation expectations). 4. Hybrid PC - 2 includes the following constraint: sum of the coefficients associated with the backward- and forward-looking terms = 1 (vertical PC), which is an extreme case. 5. A longer sample period using quarterly data from 2000-01 to 2023-24 produces similar results for the backward-looking PC (specification 1). The coefficient for crude oil changes turns out to be 0.01 in that case. Source: Authors’ estimates. 2009-10 to 2023-24. The results indicate that the the deregulation of domestic petrol and diesel prices impact of global crude oil price changes on India’s through the direct and indirect channels; nonetheless, headline inflation has increased to some extent since the impact has remained largely rangebound due to 9 Breusch-Godfrey Serial Correlation LM Test (Null hypothesis: No serial correlation at up to 2 lags): Prob. 2=0.94; Bruesh-Pagan-Godfrey test for 2 heteroskedasticity (Null hypothesis: Homoskedasticity): Prob. . The GMM specifications were exactly identified. Adjusted R-squared is not reported for GMM specifications as GMM method primarily focusses on the validity of the instruments. χ RBI Bulletin July 2025 65ARTICLE Revisiting the Oil Price and Inflation Nexus in India Chart 7: Results of Rolling Regression (16-Quarters Rolling Window) (Rolling coef(cid:20)icients, vertical scale) 0.10 0.08 0.06 0.04 0.02 0.00 -0.02 -0.04 Source: Authors’ estimates. active management of pump-prices, limiting spillover V. Conclusion to domestic inflation from large fluctuations in Oil prices and their inflationary impact is a key global crude oil prices (also seen in Charts 6a and metric that sensitise monetary policy formulation in b). This primarily reflects the role of government economies vulnerable to oil price shocks, particularly measures in containing fuel inflation as domestic net oil importers, where rising oil prices can fuel prices are often conditional upon government significantly dampen economic growth and stoke policies on excise duties of petrol and diesel. In the inflation pressures. The direct impact of international post-pandemic period, the impact, although largely crude oil price changes to domestic petrol and diesel contained, is statistically significant with the surge in inflation, and indirectly through transportation and crude oil prices owing to the post-pandemic demand input costs, is evident in the post-deregulation period revival, which further intensified due to the supply albeit at a subdued level as government intervention chain disruptions caused by the outbreak of the by taxes, cess and regulation of oil marketing Russia-Ukraine war in early 2022 (Chart 7). As current companies has often muted the impact. The results international prices are moderating consistently of the empirical analysis suggest that a 10 per cent owing to increase in supply and fall in demand due increase in international crude oil prices could raise to global economic slowdown, this augurs well for India’s headline inflation by around 20 basis points inflation as indicated by the limited passthrough to on a contemporaneous basis. domestic prices. However, increasing oil demand and Thus, while active government intervention has growing oil import dependency (indicated in Chart 4) contained spillover to domestic prices, policymakers may lead to higher susceptibility to global oil price need to be vigilant and cautious of the direct and shocks through the direct and indirect channels over indirect impact of the evolving global crude price a longer time horizon, warranting more intensive dynamics through continuous assessment, given intervention to limit the impact of spillovers. India’s increasing dependence on crude oil imports 66 RBI Bulletin July 2025 1Q4102 2Q4102 3Q4102 4Q4102 1Q5102 2Q5102 3Q5102 4Q5102 1Q6102 2Q6102 3Q6102 4Q6102 1Q7102 2Q7102 3Q7102 4Q7102 1Q8102 2Q8102 3Q8102 4Q8102 1Q9102 2Q9102 3Q9102 4Q9102 1Q0202 2Q0202 3Q0202 4Q0202 1Q1202 Impact coefficient 95% confidence intervalRevisiting the Oil Price and Inflation Nexus in India ARTICLE and a persistent demand-supply gap. In this regard, Fuhrer, J.C. (1995). The Phillips curve is alive and government policies would play a pivotal role in well. New England Economic Review, 41-57. containing the impact. Specifically, reducing crude Gali, J., and Gertler, M. (1999). Inflation dynamics: A oil dependence by promoting alternate non-fossil structural econometric analysis. Journal of Monetary energy usage and regional free trade agreements and Economics, 44(2), 195-222. bilateral treaties with major oil exporters could be Gordon, R.J. and Stock, J.H. (1998). Foundations explored for oil imports at favourable prices. of the Goldilocks economy: supply shocks and the References time-varying NAIRU. Brookings Papers on Economic Aastveit, K.A., Bjørnland, H.C., and Cross, J.L. (2023). Activity, 1998(2), 297-346. Inflation expectations and the pass-through of oil IEA. (2024). Indian Oil Market Outlook 2030, February. prices. Review of Economics and Statistics, 105(3), IMF. (2024). World Economic Outlook, October. 733-743. John, J., et al. (2023). A Recalibrated Quarterly Baba, C. and Lee, J. (2022). Second Round Effects of Projection Model (QPM 2.0) for India. RBI Bulletin, Oil price Shocks-Implications for Europe’s Inflation February. Outlook. IMF Working Paper WP/22/173, September. Jose, J., et al. (2021). Alternative Inflation Benes, J., et al. (2016). Quarterly Projection Model Forecasting Models for India-What Performs Better for India: Key Elements and Properties. RBI Working in Practice? Reserve Bank of India Occasional Paper Series No. 08/2016. Papers, 42(1). Bhanumurthy, N.R., Das, S., and Bose, S. (2012). Oil Kilian, L., and Zhou, X. (2023). A broader perspective on price shock, pass-through policy and its impact on the inflationary effects of energy price shocks. Energy India. National Institute of Public Finance and Policy Working Paper No. 2012-99. Economics, 125, 106893. Chen, S.S. (2009). Oil price pass-through into Kpodar, K., and Imam, P. A. (2021). To pass (or not inflation. Energy Economics, 31(1), 126-133. to pass) through international fuel price changes to domestic fuel prices in developing countries: What Choi, S., et al. (2018). Oil prices and inflation are the drivers?. Energy Policy, 149, 111999. dynamics: Evidence from advanced and developing economies. Journal of International Money and Lòpez-Villavicencio, A., and Pourroy, M. (2019). Finance, 82, 71-96. Inflation target and (a) symmetries in the oil price pass-through to inflation. Energy Economics, 80, 860- Conflitti, C., and Luciani, M. (2019). Oil price pass- 875. through into core inflation. The Energy Journal, 40(6), 221-248. Malikane, C. (2014). A new Keynesian triangle Phillips curve. Economic Modelling, 43, 247-255. Dees, S., et al. (2009). Identification of new Keynesian Phillips curves from a global perspective. Journal of Mandal, K., Bhattacharyya, I., and Bhoi, B.B. Money, Credit and Banking, 41(7), 1481-1502. (2012). Is the oil price pass-through in India any different?. Journal of Policy Modeling, 34(6), 832-848. Fisher, P.G., Mahadeva, L., and Whitley., J.D. (1997). The output gap and inflation–Experience at the Bank Mishkin, F.S. (2007). Inflation dynamics. International of England. BIS Conference Papers, 4. Finance, 10(3), 317-334. RBI Bulletin July 2025 67ARTICLE Revisiting the Oil Price and Inflation Nexus in India Nason, J.M., and Smith, G.W. (2008). Identifying the RBI. (2018). Monetary Policy Report, October. new Keynesian Phillips curve. Journal of Applied Yilmazkuday, H. (2021). Oil price pass-through Econometrics, 23(5), 525-551. into consumer prices: Evidence from US weekly Patra, M.D., Khundrakpam, J.K., and George, A.T. data. Journal of international Money and Finance, 119, (2014). Post-Global crisis inflation dynamics in India: 102494. What has changed?. In S. Shah, B. Bosworth and A. Panagariya (Eds.), India Policy Forum, 10(1) (pp. 117- 191). New Delhi: Sage Publications. 68 RBI Bulletin July 2025Revisiting the Oil Price and Inflation Nexus in India ARTICLE Annex Table A1: Results of the Unit Root Tests Variables Augmented Dickey Fuller (ADF) Test Statistic Log X Δ Log X -1.10 -7.87*** ln(CPI) -0.78 -6.98*** lnD(oEmxcehstainc gOeu Rtpautet )Gap -6.82*** - ln (Global Crude Oil Price) -1.89 -8.60*** ln(Rainfall Deviation) -11.34*** - ln(Global Non fuel Price) -1.11 -7.11*** Inflation Expectations -2.85* - Note: ***, ** and * indicate significance at 1 per cent, 5 per cent and 10 per cent levels of significance, respectively. The null hypothesis of ADF is that the data series is nonstationary. All variables, except rainfall deviation, were de-seasonalised before checking for the presence of unit roots. Source: Authors’ estimates. RBI Bulletin July 2025 69Determinants of Overnight Uncollateralised Money Market Volume - ARTICLE An Empirical Assessment Determinants of Overnight institutions (primary dealers) to borrow and lend funds for managing their short-term liquidity needs. Uncollateralised Money Market The volume-weighted average call rate (WACR) is the Volume - An Empirical Assessment operating target of the Reserve Bank of India’s (RBI) monetary policy as monetary transmission is the by Srijashree Sardar and Alqama Pervez^ fastest to the uncollateralised interbank segment (RBI, 2011) and as WACR is a variable that monetary policy can directly control with its actions (RBI, 2014). The money market in India has undergone significant changes in the past few decades. This article aims to Therefore, a study of the various factors that impact analyse different segments of the money market with a the volume of this segment on a day-to-day basis focus on the overnight call money market and its volume. becomes extremely necessary. The empirical findings suggest that the system liquidity The rest of the paper has been split into five conditions and the spread of the weighted average call rate sections. Section II presents the overview of the call over the policy repo rate have a significant impact on the money market; Section III provides the history of the call transaction volume. While forward premia divergence call money market in India; few stylised facts related and inflows to government also have a positive impact to the call money market in India are presented in on call money volume, the volume of the collateralised Section IV; Section V undertakes the empirical analysis segment, outflows from government and truncated for determining the factors influencing overnight call trading hours had a negative bearing on it. money market volume and the last section concludes Introduction the findings. The Indian money market is segmented into II.Overview short-term unsecured loans (call), collateralised lending and borrowing (including repurchase Banks in India have a regulatory requirement agreements), commercial papers (CPs), certificates of maintaining reserves. Scheduled banks must of deposit (CDs) and treasury bills (T-bills). The maintain the required reserves in the form of current unsecured market is dominated by the overnight account balance with the RBI, whereas non-scheduled segment (Call) whereas the triparty repo (TREP), co-operative banks and local area banks may maintain that involves several non-bank participants such as reserves in the form of cash with themselves or by mutual funds, dominates the collateralised way of balances in current accounts with the RBI or segment. with other banks.2 Reserve requirements serve dual The call market is the uncollateralised money purpose – they act as a source of liquidity for banks market, with maturities ranging from overnight to along with serving as a tool of monetary policy for the one year1, which allows banks and select financial central bank. ^ The authors are from Financial Stability Department (FSD) and The central bank can create or extinguish bank Financial Markets Operations Department (FMOD), Reserve Bank of India, respectively. The valuable suggestions received from Shri G. Seshsayee, reserves, also known as system liquidity, using its FMOD, and Shri Satish Chandra Rath, FMOD, are gratefully acknowledged. liquidity management tools that include open market The views expressed in the article are those of the authors and do not reflect the views of the Reserve Bank of India. 1 Overnight transactions are referred to as Call money. If funds are 2 Master Direction - Reserve Bank of India [Cash Reserve Ratio (CRR) borrowed/lent for more than one day and up to 14 days, it is referred to as and Statutory Liquidity Ratio (SLR)] Directions – 2021, reference number Notice money, and if the period ranges from 15 days to 1 year, it is referred DOR.No.RET.REC.32/12.01.001/2021-22 dated July 20, 2021 (Updated as on to as Term money. December 16, 2024) RBI Bulletin July 2025 71ARTICLE Determinants of Overnight Uncollateralised Money Market Volume - An Empirical Assessment operations, repo/reverse repo operations and FX swap above the MSF rate in the Call segment during the operations. System liquidity may also be impacted by day. A screen-based, quote-driven, electronic trading certain other factors which may be transient/frictional platform - NDS-CALL, launched in 2006, facilitates call or durable in nature. Transient/frictional changes to market operations. liquidity are those that could reverse course within III. History a short timeframe, including a day. Government III. 1. Participants balances with the Reserve Bank are a major source of transient/frictional changes in reserves. Durable shifts Until 1971, the call money market exclusively in liquidity arise from lasting changes in the liabilities operated as an interbank market. The Unit Trust of of the Reserve Bank viz., expansion/contraction in India and the Life Insurance Corporation of India currency in circulation (CiC) and changes in banking were granted permission to participate as lenders in system reserves due to unsterilised FX intervention this segment in 1971. Subsequently, several other operations (RBI, 2019). non-bank participants were permitted to lend in the call money market. Primary dealers were allowed to The call money market primarily acts as an avenue act both as lenders and borrowers. However, by the for eligible participants to lend and borrow reserves early 2000s, the RBI began to revert to a pure interbank among themselves for short duration (majorly call money market with PDs being the only non-bank overnight). Under neutral or near-neutral banking entity allowed. Migration of other market players system liquidity conditions, the Call rate tends to towards the collateralised segments of the market led move between the Liquidity Adjustment Facility (LAF) to greater overall market stability and diversification. corridor with the Standing Deposit Facility (SDF) rate Non-bank entities, with the exception of PDs, had and the Marginal Standing Facility (MSF) rate acting as completely withdrawn from the call money market by the floor and the ceiling of the corridor, respectively. August 2005 (Mohanty, 2012). During times of excessive surplus liquidity, Call rates tend to converge with the SDF rate as banks have no III. 2. Prudential Limits incentive to lend below the SDF rate. However, non- Based on the recommendations of the scheduled co-operative banks and local area banks Narasimham Committee (1998), the Reserve Bank maintaining reserve balance with other banks may stipulated prudential limits on lending and borrowing switch their excess balance into Call money with by participants in call money in a phased manner. In their correspondent banks or with any other eligible April 2005, these limits were linked to capital funds borrower to earn overnight remuneration. Such for scheduled commercial banks. Till recently, such transactions may be below SDF rate since these co- banks were allowed to borrow up to 100 per cent of operative and local area banks do not have access their Tier I and Tier II capital on a daily average basis to the RBI’s SDF. Conversely, under deficit liquidity in a reporting fortnight, and 125 per cent of owned conditions, banks tend to borrow at around the MSF funds on any given day in the Call and Notice market. rate as interbank transactions do not suffice for However, in June 2023, scheduled commercial overnight reserve requirements and there has to be a banks (excluding small finance banks and payments net borrowing of reserves from the RBI at the end of banks) were allowed to establish their own limits for the day. Primary dealers (PDs), who do not have access borrowing in the money market while adhering to the to the MSF window, may, however, transact at rates prudential limits for interbank liabilities prescribed 72 RBI Bulletin July 2025Determinants of Overnight Uncollateralised Money Market Volume - ARTICLE An Empirical Assessment by the Reserve Bank of India. The changes were became the implicit ceiling for the Call rate. In 2011, intended to enhance banks’ flexibility in managing the Reserve Bank adopted the WACR as the operating their money market borrowings. Furthermore, in target of its monetary policy. terms of the extant guidelines, prudential limits IV. Stylised Facts relating to lending transactions can be determined by IV.1 Transaction Volumes the eligible institutions themselves with the approval of their respective Board.3 Activity in the Indian money market has increased significantly in recent years, with the collateralised III. 3. Interest Rates segment, led by the triparty repo, dominating in terms Prior to December 1973, call money rates were of transaction volume. The collateralised segment determined by the market forces. However, as the had an average volume share of 96 per cent as rates routinely surpassed 25-30 per cent, the Indian against 4 per cent share of the uncollateralised call Banks’ Association (IBA) found it needful to interfere money market during the period under consideration and bring stability to the market. The IBA believed (January 2019 to December 2024) (Chart 1a). While that prolonged high interest rates would disrupt the the transacted volume of the call segment has nearly operations of the entire banking system and would halved from 2019 to 2024, its share in the overall money contradict the fundamental goals of planned credit market has shrunk to 2 per cent in December 2024 allocation under a regulated lending rate framework. from 10 per cent in January 2019. The average daily Thus, a ceiling of 15 per cent was set on Call rate in traded volume in TREP and market Repo increased to December 1973, which was modulated time to time ₹3.4 lakh crores and 1.4 lakh crores in 2024 from 1.4 (RBI, 1987). With the phased introduction of the lakh crores and 0.5 lakh crores, respectively, in 2019 LAF in 2000, the repo rate (and later the MSF rate) (Chart 1b). (cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:3)(cid:20)(cid:29)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:79)(cid:92)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:39)(cid:68)(cid:76)(cid:79)(cid:92)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:48)(cid:82)(cid:81)(cid:72)(cid:92)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72) (cid:68)(cid:17)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:79)(cid:92)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72) (cid:69)(cid:17)(cid:3)(cid:39)(cid:68)(cid:76)(cid:79)(cid:92)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72) (cid:523)(cid:19)(cid:135)(cid:148)(cid:3)(cid:133)(cid:135)(cid:144)(cid:150)(cid:524) (cid:523)(cid:139)(cid:144)(cid:3)(cid:3400)(cid:3)(cid:142)(cid:131)(cid:141)(cid:138)(cid:3)(cid:133)(cid:148)(cid:145)(cid:148)(cid:135)(cid:149)(cid:524) (cid:20)(cid:19)(cid:19) (cid:27)(cid:19) (cid:25)(cid:19) (cid:23)(cid:19) (cid:21)(cid:19) (cid:19) (cid:54)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:29)(cid:3)(cid:38)(cid:38)(cid:44)(cid:47)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:86)(cid:183)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17) 3 Reserve Bank of India. (Call, Notice and Term Money Markets) Directions, 2021-Review, reference number FMRD. DIRD. 02/14.01.001/2023-24 dated June 08, 2023. (https://rbi.org.in/scripts/FS_Notification.aspx?Id=12511&fn=6&Mode=0) RBI Bulletin July 2025 73 (cid:28)(cid:20)(cid:16)(cid:81)(cid:68)(cid:45) (cid:28)(cid:20)(cid:16)(cid:85)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:92)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:79)(cid:88)(cid:45) (cid:28)(cid:20)(cid:16)(cid:83)(cid:72)(cid:54) (cid:28)(cid:20)(cid:16)(cid:89)(cid:82)(cid:49) (cid:19)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:19)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:19)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:19)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:20)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:20)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:20)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:20)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:21)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:21)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:21)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:21)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:22)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:22)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:22)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:22)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:23)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:23)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:23)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:23)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:25)(cid:17)(cid:19) (cid:24)(cid:17)(cid:24) (cid:24)(cid:17)(cid:19) (cid:23)(cid:17)(cid:24) (cid:23)(cid:17)(cid:19) (cid:22)(cid:17)(cid:24) (cid:22)(cid:17)(cid:19) (cid:21)(cid:17)(cid:24) (cid:21)(cid:17)(cid:19) (cid:20)(cid:17)(cid:24) (cid:20)(cid:17)(cid:19) (cid:19)(cid:17)(cid:24) (cid:19)(cid:17)(cid:19) (cid:38)(cid:68)(cid:79)(cid:79)(cid:18)(cid:49)(cid:82)(cid:87)(cid:76)(cid:70)(cid:72) (cid:55)(cid:85)(cid:76)(cid:83)(cid:68)(cid:85)(cid:87)(cid:92)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82) (cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82) (cid:28)(cid:20)(cid:16)(cid:81)(cid:68)(cid:45) (cid:28)(cid:20)(cid:16)(cid:85)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:92)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:79)(cid:88)(cid:45) (cid:28)(cid:20)(cid:16)(cid:83)(cid:72)(cid:54) (cid:28)(cid:20)(cid:16)(cid:89)(cid:82)(cid:49) (cid:19)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:19)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:19)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:19)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:20)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:20)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:20)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:20)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:21)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:21)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:21)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:21)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:22)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:22)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:22)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:22)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:23)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:23)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:23)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:23)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:38)(cid:68)(cid:79)(cid:79)(cid:18)(cid:49)(cid:82)(cid:87)(cid:76)(cid:70)(cid:72) (cid:55)(cid:85)(cid:76)(cid:83)(cid:68)(cid:85)(cid:87)(cid:92)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82) (cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)ARTICLE Determinants of Overnight Uncollateralised Money Market Volume - An Empirical Assessment Within the uncollateralised call money segment, period from 2019 to 2024, which increased gradually the overnight segment dominates in terms of volume over time from 30 per cent in 2019 to 79 percent in (Chart 2). Despite several measures taken by the 2024. The borrowing share of PSBs has come down Reserve Bank over the years, volumes in the Notice drastically, from 32 per cent in 2019 to 3 per cent in and Term money segments remain very low - on an 2024, with that of PVBs also declining steadily during average 6 per cent of the overall call money volume the same period as banks increased their borrowing during the study period. activity in the collateralised segment. IV.2 Participants Profile On the other side, co-operative banks are the Entities currently eligible to participate in major lenders in the segment. The transaction volume the Call, Notice and Term money markets, both as of co-operative banks has not changed significantly borrowers and lenders are scheduled commercial over time, although their share has increased since banks (including payment banks and small finance 2019 (Chart 3b). This is mainly due to the transaction banks), regional rural banks, co-operative banks (state volume of PSBs and PVBs decreasing substantially, co-operative banks, district central co-operative banks especially during the COVID-19 pandemic period. and urban co-operative banks) and primary dealers. While the share of co-operative banks in the monthly Primary dealers are the major borrowers in the lending volume was around 66 per cent during the segment. The share of PDs has increased over the pandemic, its share in lending was on an average 57 years while the share of public sector banks (PSBs) and per cent of overall transacted volume during the period private banks (PVBs) declined correspondingly (Chart of 2019 to 2024. Co-operative banks participation in 3a). The share of monthly borrowing volume of PDs call money market decreased significantly after the was on an average 59 per cent of the total transacted Reserve Bank’s directive for mandatory membership volume in the uncollateralised segment during the on NDS-CALL trading platform for call money market (cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:3)(cid:21)(cid:29)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:79)(cid:92)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:68)(cid:76)(cid:79)(cid:92)(cid:3)(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:38)(cid:68)(cid:79)(cid:79)(cid:3)(cid:48)(cid:82)(cid:81)(cid:72)(cid:92)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87) (cid:523)(cid:139)(cid:144)(cid:3)(cid:3400)(cid:3)(cid:133)(cid:148)(cid:145)(cid:148)(cid:135)(cid:149)(cid:524) (cid:22)(cid:19)(cid:19)(cid:19)(cid:19) (cid:21)(cid:24)(cid:19)(cid:19)(cid:19) (cid:21)(cid:19)(cid:19)(cid:19)(cid:19) (cid:20)(cid:24)(cid:19)(cid:19)(cid:19) (cid:20)(cid:19)(cid:19)(cid:19)(cid:19) (cid:24)(cid:19)(cid:19)(cid:19) (cid:19) (cid:54)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:29)(cid:3)(cid:38)(cid:38)(cid:44)(cid:47)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:86)(cid:183)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17) 74 RBI Bulletin July 2025 (cid:28)(cid:20)(cid:16)(cid:81)(cid:68)(cid:45) (cid:28)(cid:20)(cid:16)(cid:85)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:92)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:79)(cid:88)(cid:45) (cid:28)(cid:20)(cid:16)(cid:83)(cid:72)(cid:54) (cid:28)(cid:20)(cid:16)(cid:89)(cid:82)(cid:49) (cid:19)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:19)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:19)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:19)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:20)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:20)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:20)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:20)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:21)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:21)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:21)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:21)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:22)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:22)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:22)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:22)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:23)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:23)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:23)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:38)(cid:68)(cid:79)(cid:79) (cid:49)(cid:82)(cid:87)(cid:76)(cid:70)(cid:72) (cid:55)(cid:72)(cid:85)(cid:80) (cid:23)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49)Determinants of Overnight Uncollateralised Money Market Volume - ARTICLE An Empirical Assessment (cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:3)(cid:22)(cid:29)(cid:3)(cid:38)(cid:68)(cid:79)(cid:79)(cid:3)(cid:48)(cid:82)(cid:81)(cid:72)(cid:92)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:37)(cid:82)(cid:85)(cid:85)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:47)(cid:72)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:51)(cid:85)(cid:82)(cid:73)(cid:76)(cid:79)(cid:72) (cid:68)(cid:17)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:80)(cid:82)(cid:81)(cid:87)(cid:75)(cid:79)(cid:92)(cid:3)(cid:69)(cid:82)(cid:85)(cid:85)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)(cid:89)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72) (cid:69)(cid:17)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:80)(cid:82)(cid:81)(cid:87)(cid:75)(cid:79)(cid:92)(cid:3)(cid:79)(cid:72)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:89)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72) (cid:523)(cid:19)(cid:135)(cid:148)(cid:3)(cid:133)(cid:135)(cid:144)(cid:150)(cid:524) (cid:523)(cid:19)(cid:135)(cid:148)(cid:3)(cid:133)(cid:135)(cid:144)(cid:150)(cid:524) (cid:28)(cid:19) (cid:27)(cid:19) (cid:27)(cid:19) (cid:26)(cid:19) (cid:26)(cid:19) (cid:25)(cid:19) (cid:25)(cid:19) (cid:24)(cid:19) (cid:24)(cid:19) (cid:23)(cid:19) (cid:23)(cid:19) (cid:22)(cid:19) (cid:22)(cid:19) (cid:21)(cid:19) (cid:21)(cid:19) (cid:20)(cid:19) (cid:20)(cid:19) (cid:19) (cid:19) (cid:21)(cid:19)(cid:20)(cid:28) (cid:21)(cid:19)(cid:21)(cid:19) (cid:21)(cid:19)(cid:21)(cid:20) (cid:21)(cid:19)(cid:21)(cid:21) (cid:21)(cid:19)(cid:21)(cid:22) (cid:21)(cid:19)(cid:21)(cid:23) (cid:21)(cid:19)(cid:20)(cid:28) (cid:21)(cid:19)(cid:21)(cid:19) (cid:21)(cid:19)(cid:21)(cid:20) (cid:21)(cid:19)(cid:21)(cid:21) (cid:21)(cid:19)(cid:21)(cid:22) (cid:21)(cid:19)(cid:21)(cid:23) (cid:51)(cid:85)(cid:76)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3)(cid:71)(cid:72)(cid:68)(cid:79)(cid:72)(cid:85)(cid:86) (cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:3)(cid:86)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:86) (cid:51)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:86) (cid:38)(cid:82)(cid:16)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:86) (cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:3)(cid:86)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:86) (cid:51)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:86) (cid:3) (cid:54)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:29)(cid:3)(cid:38)(cid:38)(cid:44)(cid:47)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:86)(cid:183)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17) activity4. It has, however, rebounded in the recent However, the share of reported deals in the overall months, suggesting an increase in membership of co- call money market segment has dwindled sharply operative banks. post the RBI Master Direction5 dated April 1, 2021, and the subsequent Fixed Income Money Market IV.3 Transacting Mechanism and Derivatives Association of India (FIMMDA) Call money transactions are executed either on notification6 dated September 29, 2022, in terms the NDS-CALL platform, a screen-based, quote-driven of which all eligible participants in the Call, Notice electronic trading system managed by the CCIL, or and Term money markets were required to obtain through bilateral communication outside the NDS- membership of NDS-CALL platform in due course of CALL platform, which must be subsequently reported time. on the platform by the transacting members. These are called traded deals and reported deals, respectively. IV.4 Traded and Reported Deals Entities that do not have NDS-CALL membership The monthly share of traded deals within the call must report the deals directly to the RBI. money market has been rapidly increasing since Q1 of Traditionally, traded and reported deals have 2022 as transactions between member counterparties differed in terms of participants, rates and volume, have increased over those with non-members, with the latter predominantly comprising of especially following the RBI’s directive for mandatory transactions between non-scheduled co-operative membership on NDS-CALL trading platform for call banks (mostly non-members of NDS-CALL) and their money market activity. The share of reported deals correspondent banks or other eligible borrowers. has been almost nil since December 2023 (Chart 4). 4 Master Direction - Reserve Bank of India. (Call, Notice and 5 ibid Term Money Markets) Directions, 2021, reference number FMRD. DIRD.02/14.01.001/2021-22 dated April 01, 2021 (Updated as on June 6 FIMMDA notice about Membership of NDS -CALL Platform – 08, 2023) (https://www.rbi.org. in/Scripts/BS_ViewMasDirections. FIMNOT/2022-23/06 dated September 29, 2022. (https://www.fimmda.org/ aspx?id=12061) Uploads/general/06-Membeship_nds_call_platform_29092022.pdf) RBI Bulletin July 2025 75ARTICLE Determinants of Overnight Uncollateralised Money Market Volume - An Empirical Assessment (cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:3)(cid:23)(cid:29)(cid:3)(cid:52)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:55)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:68)(cid:79)(cid:86) (cid:523)(cid:19)(cid:135)(cid:148)(cid:3)(cid:133)(cid:135)(cid:144)(cid:150)(cid:524) (cid:20)(cid:19)(cid:19) (cid:28)(cid:19) (cid:27)(cid:19) (cid:26)(cid:19) (cid:25)(cid:19) (cid:24)(cid:19) (cid:23)(cid:19) (cid:22)(cid:19) (cid:21)(cid:19) (cid:20)(cid:19) (cid:19) (cid:52)(cid:20) (cid:52)(cid:21) (cid:52)(cid:22) (cid:52)(cid:23) (cid:52)(cid:20) (cid:52)(cid:21) (cid:52)(cid:22) (cid:52)(cid:23) (cid:52)(cid:20) (cid:52)(cid:21) (cid:52)(cid:22) (cid:52)(cid:23) (cid:52)(cid:20) (cid:52)(cid:21) (cid:52)(cid:22) (cid:52)(cid:23) (cid:52)(cid:20) (cid:52)(cid:21) (cid:52)(cid:22) (cid:52)(cid:23) (cid:21)(cid:19)(cid:20)(cid:28) (cid:21)(cid:19)(cid:21)(cid:19) (cid:21)(cid:19)(cid:21)(cid:20) (cid:21)(cid:19)(cid:21)(cid:21) (cid:21)(cid:19)(cid:21)(cid:22) (cid:55)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)(cid:3)(cid:89)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72) (cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:89)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72) (cid:54)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:29)(cid:3)(cid:38)(cid:38)(cid:44)(cid:47)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:86)(cid:183)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17) IV.5 Temporal Distribution of Trades balance with the RBI, spread of the WACR over policy repo rate, monetary policy announcement, USD/INR A peculiar feature of the call money market is forward premia, market hours and the RBI regulations. the skewed distribution of trades within the day. The bulk of the trades occur in the first hour of any given To examine the determinants of the volume in day which may be attributed to the fact that primary Call market, the study employs the overall volume of the overnight segment (traded and reported) as a dealers, the major borrower in the segment, tend to dependent variable. For this purpose, we have used fulfil their funding needs early in the day. Chart 5 daily data from January 1, 2019 to December 31, 2024, shows the temporal distribution of trades in the call excluding working Saturdays7 since the call money money market under four different scenarios within market volumes remain very low on these days with the period of study – limited participant base. Scenarios Period Considered The dependent variables chosen and their Scenario I: Regular (Non- January 2019 to April 6, 2020, and truncated) trading hours (9AM December 12, 2022, to December 31, expected influence on the independent variable are to 5PM) 2024 discussed below and summarized in Table 1. Scenario II: Truncated trading April 7, 2020, to November 8, 2020 hours (10AM to 2PM) V.1. Influencing Factors and Their Impact Scenario III: Truncated trading November 9, 2020, to April 17, 2022 hours (10AM to 3:30PM) (i) Net System Liquidity: As the call money Scenario IV: Truncated trading April 18, 2022, to December 11, 2022 segment majorly acts as a platform for redistribution of hours (9AM to 3.30PM) reserves, the net banking system liquidity, measured V. Data and Empirics as the net liquidity absorbed by the central bank on Transaction volume in the Call segment is any given day (liquidity absorbed under SDF and impacted by several factors. This paper attempts to variable rate reverse repo operations net of liquidity study the extent to which the transaction volume is injected through MSF, repo operations and standing influenced by system liquidity conditions as well as liquidity facilities) and published daily by the RBI in other factors like activity in the collateralised segment 7 Saturdays of the month when banks are operational, i.e., all Saturdays (TREP and market repo), changes in government except 2nd and 4th Saturday of the month 76 RBI Bulletin July 2025Determinants of Overnight Uncollateralised Money Market Volume - ARTICLE An Empirical Assessment (cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:3)(cid:24)(cid:29)(cid:3)(cid:55)(cid:72)(cid:80)(cid:83)(cid:82)(cid:85)(cid:68)(cid:79)(cid:3)(cid:39)(cid:76)(cid:86)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:68)(cid:79)(cid:86)(cid:3)(cid:11)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:39)(cid:68)(cid:76)(cid:79)(cid:92)(cid:3)(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:12)(cid:3)(cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:39)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3)(cid:54)(cid:70)(cid:72)(cid:81)(cid:68)(cid:85)(cid:76)(cid:82)(cid:86) (cid:68)(cid:17)(cid:3)(cid:54)(cid:70)(cid:72)(cid:81)(cid:68)(cid:85)(cid:76)(cid:82)(cid:3)(cid:44) (cid:69)(cid:17)(cid:3)(cid:54)(cid:70)(cid:72)(cid:81)(cid:68)(cid:85)(cid:76)(cid:82)(cid:3)(cid:44)(cid:44) (cid:523)(cid:139)(cid:144)(cid:3)(cid:3400)(cid:3)(cid:133)(cid:148)(cid:145)(cid:148)(cid:135)(cid:149)(cid:524) (cid:523)(cid:139)(cid:144)(cid:3)(cid:3400)(cid:3)(cid:133)(cid:148)(cid:145)(cid:148)(cid:135)(cid:149)(cid:524) (cid:25)(cid:19)(cid:19)(cid:19) (cid:24)(cid:19)(cid:19)(cid:19) (cid:23)(cid:19)(cid:19)(cid:19) (cid:22)(cid:19)(cid:19)(cid:19) (cid:21)(cid:19)(cid:19)(cid:19) (cid:20)(cid:19)(cid:19)(cid:19) (cid:19) (cid:70)(cid:17)(cid:3)(cid:54)(cid:70)(cid:72)(cid:81)(cid:68)(cid:85)(cid:76)(cid:82)(cid:3)(cid:44)(cid:44)(cid:44) (cid:71)(cid:17)(cid:3)(cid:54)(cid:70)(cid:72)(cid:81)(cid:68)(cid:85)(cid:76)(cid:82)(cid:3)(cid:44)(cid:57)(cid:3) (cid:523)(cid:139)(cid:144)(cid:3)(cid:3400)(cid:3)(cid:133)(cid:148)(cid:145)(cid:148)(cid:135)(cid:149)(cid:524) (cid:523)(cid:139)(cid:144)(cid:3)(cid:3400)(cid:3)(cid:133)(cid:148)(cid:145)(cid:148)(cid:135)(cid:149)(cid:524) (cid:49)(cid:82)(cid:87)(cid:72)(cid:29)(cid:3)(cid:13)(cid:41)(cid:82)(cid:85)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:71)(cid:72)(cid:68)(cid:79)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:54)(cid:70)(cid:72)(cid:81)(cid:68)(cid:85)(cid:76)(cid:82)(cid:3)(cid:44)(cid:15)(cid:3)(cid:82)(cid:81)(cid:79)(cid:92)(cid:3)(cid:71)(cid:68)(cid:87)(cid:68)(cid:3)(cid:88)(cid:83)(cid:3)(cid:87)(cid:82)(cid:3)(cid:49)(cid:82)(cid:89)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:21)(cid:22)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:71)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:71)(cid:68)(cid:76)(cid:79)(cid:92)(cid:3)(cid:89)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:3)(cid:68)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:71)(cid:72)(cid:68)(cid:79)(cid:86)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:81)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3) (cid:68)(cid:69)(cid:86)(cid:72)(cid:81)(cid:87)(cid:3)(cid:86)(cid:76)(cid:81)(cid:70)(cid:72)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:21)(cid:22)(cid:17) (cid:54)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:29)(cid:3)(cid:38)(cid:38)(cid:44)(cid:47)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:86)(cid:183)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17) RBI Bulletin July 2025 77 (cid:48)(cid:36)(cid:19)(cid:20)(cid:16)(cid:48)(cid:36)(cid:28) (cid:48)(cid:36)(cid:20)(cid:20)(cid:16)(cid:48)(cid:36)(cid:19)(cid:20) (cid:48)(cid:51)(cid:21)(cid:20)(cid:16)(cid:48)(cid:36)(cid:20)(cid:20) (cid:48)(cid:51)(cid:20)(cid:16)(cid:48)(cid:51)(cid:21)(cid:20) (cid:48)(cid:51)(cid:21)(cid:16)(cid:48)(cid:51)(cid:20) (cid:48)(cid:51)(cid:22)(cid:16)(cid:48)(cid:51)(cid:21) (cid:48)(cid:51)(cid:23)(cid:16)(cid:48)(cid:51)(cid:22) (cid:48)(cid:51)(cid:24)(cid:16)(cid:48)(cid:51)(cid:23) (cid:13)(cid:86)(cid:79)(cid:68)(cid:72)(cid:39)(cid:3)(cid:71)(cid:72)(cid:87)(cid:85)(cid:82)(cid:83)(cid:72)(cid:53) (cid:25)(cid:19)(cid:19)(cid:19) (cid:24)(cid:19)(cid:19)(cid:19) (cid:23)(cid:19)(cid:19)(cid:19) (cid:22)(cid:19)(cid:19)(cid:19) (cid:21)(cid:19)(cid:19)(cid:19) (cid:20)(cid:19)(cid:19)(cid:19) (cid:19) (cid:55)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:68)(cid:79)(cid:86) (cid:55)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:68)(cid:79)(cid:86) (cid:55)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:68)(cid:79)(cid:86) (cid:55)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:68)(cid:79)(cid:86) (cid:48)(cid:36)(cid:20)(cid:20)(cid:16)(cid:48)(cid:36)(cid:19)(cid:20) (cid:48)(cid:51)(cid:21)(cid:20)(cid:16)(cid:48)(cid:36)(cid:20)(cid:20) (cid:48)(cid:51)(cid:20)(cid:16)(cid:48)(cid:51)(cid:21)(cid:20) (cid:48)(cid:51)(cid:21)(cid:16)(cid:48)(cid:51)(cid:20) (cid:86)(cid:79)(cid:68)(cid:72)(cid:39)(cid:3)(cid:71)(cid:72)(cid:87)(cid:85)(cid:82)(cid:83)(cid:72)(cid:53) (cid:25)(cid:19)(cid:19)(cid:19) (cid:24)(cid:19)(cid:19)(cid:19) (cid:23)(cid:19)(cid:19)(cid:19) (cid:22)(cid:19)(cid:19)(cid:19) (cid:21)(cid:19)(cid:19)(cid:19) (cid:20)(cid:19)(cid:19)(cid:19) (cid:19) (cid:48)(cid:36)(cid:20)(cid:20)(cid:16)(cid:48)(cid:36)(cid:19)(cid:20) (cid:48)(cid:51)(cid:21)(cid:20)(cid:16)(cid:48)(cid:36)(cid:20)(cid:20) (cid:48)(cid:51)(cid:20)(cid:16)(cid:48)(cid:51)(cid:21)(cid:20) (cid:48)(cid:51)(cid:21)(cid:16)(cid:48)(cid:51)(cid:20) (cid:48)(cid:51)(cid:22)(cid:16)(cid:48)(cid:51)(cid:21) (cid:48)(cid:51)(cid:19)(cid:22)(cid:17)(cid:22)(cid:16)(cid:48)(cid:51)(cid:22) (cid:86)(cid:79)(cid:68)(cid:72)(cid:39)(cid:3)(cid:71)(cid:72)(cid:87)(cid:85)(cid:82)(cid:83)(cid:72)(cid:53) (cid:25)(cid:19)(cid:19)(cid:19) (cid:24)(cid:19)(cid:19)(cid:19) (cid:23)(cid:19)(cid:19)(cid:19) (cid:22)(cid:19)(cid:19)(cid:19) (cid:21)(cid:19)(cid:19)(cid:19) (cid:20)(cid:19)(cid:19)(cid:19) (cid:19) (cid:48)(cid:36)(cid:19)(cid:20)(cid:16)(cid:48)(cid:36)(cid:28) (cid:48)(cid:36)(cid:20)(cid:20)(cid:16)(cid:48)(cid:36)(cid:19)(cid:20) (cid:48)(cid:51)(cid:21)(cid:20)(cid:16)(cid:48)(cid:36)(cid:20)(cid:20) (cid:48)(cid:51)(cid:20)(cid:16)(cid:48)(cid:51)(cid:21)(cid:20) (cid:48)(cid:51)(cid:21)(cid:16)(cid:48)(cid:51)(cid:20) (cid:48)(cid:51)(cid:22)(cid:16)(cid:48)(cid:51)(cid:21) (cid:48)(cid:51)(cid:19)(cid:22)(cid:17)(cid:22)(cid:16)(cid:48)(cid:51)(cid:22) (cid:86)(cid:79)(cid:68)(cid:72)(cid:39)(cid:3)(cid:71)(cid:72)(cid:87)(cid:85)(cid:82)(cid:83)(cid:72)(cid:53) Table 1: Variables, Expected Signs and their Sources Sr.No. Variable Notation used Frequency Expected sign Source 1. Volume of overnight call money market (in lakh crores) CALL daily Dependent CCIL variable 2. Previous day volume of overnight call money market (in lakh CALL (-1) daily + CCIL crores) 3. Net liquidity injected (in lakh crores) LAF daily + RBI 4. WACR spread over policy repo rate WACRSPREAD daily + CCIL; RBI; Author’s estimation 5. TREP + Market Repo traded volume (in lakh crores) TRMR daily – CCIL 6. Forward Premia Divergence (FPD) dummy: FPD=1, if |IRD - FPREMD daily + RBI; Bloomberg; FBIL overnight forward premia|>0.25; 0, otherwise Where, IRD = Interest rate differential = WACR - SOFR; SOFR = US Secured Overnight Funding Rate 7. Inflows to the government (GOI inflow) dummy: GOI_POS = 1, GOI_POS daily + RBI if flow of more than 50K from the banking system to the government 0, otherwise 8. Outflows from the government (GOI outflow) dummy: GOI_ GOI_NEG daily – RBI NEG = 1, if flow of more than 50K from the government to the banking system 0, otherwise 9. Market hours dummy: MHOURS daily – RBI; Authors estimation MHOURS=1, if truncated market hours; 0, if regular market hours 10. MPC dummy; 1 for MPC announcement day; 0, otherwise MPC daily + RBI; Authors estimation 11. Regulation dummy; for period after the directions mandating REGULATION daily – RBI; Authors estimation acquisition of membership of NDS-CALL platform: 1 from October 2022 onwards; 0, otherwiseARTICLE Determinants of Overnight Uncollateralised Money Market Volume - An Empirical Assessment the form of Money Market Operations Press Release, (ii) Spread of the Weighted Average Call Rate is expected to serve as an important determinant of over Repo Rate: The call money market being the Call volume. When the system is flush with liquidity, primary avenue for banks to transact in reserves and banks have less reasons to transact in the call market the policy repo rate being the midpoint of the LAF as most banks are holding adequate reserves to meet corridor, a rise in the spread of the WACR over the their regulatory and settlement needs (Chart 6). It repo rate is usually associated with an increase in the is under constrained liquidity scenario that market overnight call volume as it indicates a heightened participants have to actively vie for reserves, pushing demand for reserves (Chart 7). up Call volume. (cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:3)(cid:26)(cid:29)(cid:3)(cid:50)(cid:89)(cid:72)(cid:85)(cid:81)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:38)(cid:68)(cid:79)(cid:79)(cid:3)(cid:48)(cid:82)(cid:81)(cid:72)(cid:92)(cid:3)(cid:89)(cid:86)(cid:17)(cid:3)(cid:58)(cid:36)(cid:38)(cid:53)(cid:3)(cid:86)(cid:83)(cid:85)(cid:72)(cid:68)(cid:71)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:3)(cid:53)(cid:68)(cid:87)(cid:72) (cid:523)(cid:25)(cid:145)(cid:142)(cid:151)(cid:143)(cid:135)(cid:3)(cid:139)(cid:144)(cid:3)(cid:3400)(cid:3)(cid:142)(cid:131)(cid:141)(cid:138)(cid:3)(cid:133)(cid:148)(cid:145)(cid:148)(cid:135)(cid:149)(cid:481)(cid:3)(cid:142)(cid:135)(cid:136)(cid:150)(cid:3)(cid:149)(cid:133)(cid:131)(cid:142)(cid:135)(cid:482)(cid:3)(cid:19)(cid:135)(cid:148)(cid:3)(cid:133)(cid:135)(cid:144)(cid:150)(cid:481)(cid:3)(cid:148)(cid:139)(cid:137)(cid:138)(cid:150)(cid:3)(cid:149)(cid:133)(cid:131)(cid:142)(cid:135)(cid:524) (cid:19)(cid:17)(cid:24) (cid:20)(cid:17)(cid:19) (cid:19)(cid:17)(cid:23) (cid:19)(cid:17)(cid:27) (cid:19)(cid:17)(cid:22) (cid:19)(cid:17)(cid:25) (cid:19)(cid:17)(cid:21) (cid:19)(cid:17)(cid:23) (cid:19)(cid:17)(cid:20) (cid:19)(cid:17)(cid:21) (cid:19)(cid:17)(cid:19) (cid:19)(cid:17)(cid:19) (cid:16)(cid:19)(cid:17)(cid:20) (cid:16)(cid:19)(cid:17)(cid:21) (cid:16)(cid:19)(cid:17)(cid:21) (cid:16)(cid:19)(cid:17)(cid:23) (cid:16)(cid:19)(cid:17)(cid:22) (cid:16)(cid:19)(cid:17)(cid:25) (cid:16)(cid:19)(cid:17)(cid:23) (cid:16)(cid:19)(cid:17)(cid:27) (cid:16)(cid:19)(cid:17)(cid:24) (cid:16)(cid:20)(cid:17)(cid:19) (cid:54)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:29)(cid:3)(cid:53)(cid:37)(cid:44)(cid:15)(cid:3)(cid:38)(cid:38)(cid:44)(cid:47)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:86)(cid:183)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17) 78 RBI Bulletin July 2025 (cid:28)(cid:20)(cid:16)(cid:81)(cid:68)(cid:45) (cid:28)(cid:20)(cid:16)(cid:85)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:92)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:79)(cid:88)(cid:45) (cid:28)(cid:20)(cid:16)(cid:83)(cid:72)(cid:54) (cid:28)(cid:20)(cid:16)(cid:89)(cid:82)(cid:49) (cid:19)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:19)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:19)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:19)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:20)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:20)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:20)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:20)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:21)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:21)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:21)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:21)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:22)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:22)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:22)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:22)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:23)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:23)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:23)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:38)(cid:68)(cid:79)(cid:79) (cid:58)(cid:36)(cid:38)(cid:53)(cid:54)(cid:83)(cid:85)(cid:72)(cid:68)(cid:71)(cid:3)(cid:11)(cid:53)(cid:43)(cid:54)(cid:12) (cid:23)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:3)(cid:25)(cid:29)(cid:3)(cid:50)(cid:89)(cid:72)(cid:85)(cid:81)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:48)(cid:82)(cid:81)(cid:72)(cid:92)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:3)(cid:89)(cid:86)(cid:17)(cid:3)(cid:49)(cid:72)(cid:87)(cid:3)(cid:54)(cid:92)(cid:86)(cid:87)(cid:72)(cid:80)(cid:3)(cid:47)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92) (cid:523)(cid:139)(cid:144)(cid:3)(cid:3400)(cid:3)(cid:142)(cid:131)(cid:141)(cid:138)(cid:3)(cid:133)(cid:148)(cid:145)(cid:148)(cid:135)(cid:149)(cid:481)(cid:3)(cid:132)(cid:145)(cid:150)(cid:138)(cid:3)(cid:142)(cid:135)(cid:136)(cid:150)(cid:3)(cid:131)(cid:144)(cid:134)(cid:3)(cid:148)(cid:139)(cid:137)(cid:138)(cid:150)(cid:3)(cid:149)(cid:133)(cid:131)(cid:142)(cid:135)(cid:524) (cid:20)(cid:19)(cid:17)(cid:19) (cid:19)(cid:17)(cid:23) (cid:28)(cid:17)(cid:19) (cid:27)(cid:17)(cid:19) (cid:19)(cid:17)(cid:22) (cid:26)(cid:17)(cid:19) (cid:25)(cid:17)(cid:19) (cid:24)(cid:17)(cid:19) (cid:19)(cid:17)(cid:21) (cid:23)(cid:17)(cid:19) (cid:22)(cid:17)(cid:19) (cid:19)(cid:17)(cid:20) (cid:21)(cid:17)(cid:19) (cid:20)(cid:17)(cid:19) (cid:19)(cid:17)(cid:19) (cid:19)(cid:17)(cid:19) (cid:16)(cid:20)(cid:17)(cid:19) (cid:16)(cid:21)(cid:17)(cid:19) (cid:16)(cid:19)(cid:17)(cid:20) (cid:16)(cid:22)(cid:17)(cid:19) (cid:16)(cid:23)(cid:17)(cid:19) (cid:16)(cid:24)(cid:17)(cid:19) (cid:16)(cid:19)(cid:17)(cid:21) (cid:54)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:29)(cid:3)(cid:53)(cid:37)(cid:44)(cid:15)(cid:3)(cid:38)(cid:38)(cid:44)(cid:47)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:86)(cid:183)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3) (cid:28)(cid:20)(cid:16)(cid:81)(cid:68)(cid:45) (cid:28)(cid:20)(cid:16)(cid:85)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:92)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:79)(cid:88)(cid:45) (cid:28)(cid:20)(cid:16)(cid:83)(cid:72)(cid:54) (cid:28)(cid:20)(cid:16)(cid:89)(cid:82)(cid:49) (cid:19)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:19)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:19)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:19)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:20)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:20)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:20)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:20)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:21)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:21)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:21)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:21)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:22)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:22)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:22)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:22)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:23)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:23)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:23)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:49)(cid:72)(cid:87)(cid:3)(cid:79)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92)(cid:3)(cid:86)(cid:88)(cid:85)(cid:83)(cid:79)(cid:88)(cid:86)(cid:11)(cid:14)(cid:12)(cid:18)(cid:71)(cid:72)(cid:73)(cid:76)(cid:70)(cid:76)(cid:87)(cid:11)(cid:16)(cid:12) (cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:72)(cid:71)(cid:3)(cid:80)(cid:82)(cid:81)(cid:72)(cid:92)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:11)(cid:55)(cid:53)(cid:40)(cid:51)(cid:54)(cid:14)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:12) (cid:56)(cid:81)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:72)(cid:71)(cid:3)(cid:80)(cid:82)(cid:81)(cid:72)(cid:92)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:11)(cid:53)(cid:43)(cid:54)(cid:12) (cid:23)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49)Determinants of Overnight Uncollateralised Money Market Volume - ARTICLE An Empirical Assessment (iii) Transaction Volume in TREP and Market post the Monetary Policy Committee (MPC) decision. Repo Segments: The collateralised TREP and market (vi) USD/INR Forward Premia: The forward repo segments provide avenue to banks as well as premium for a tenor for a currency pair should ideally non-bank participants to lend and borrow for short reflect the interest rate differential between the term, largely overnight. Mutual funds (MFs) dominate currencies at that tenor. However, the forward premia the lending side of TREP, cornering more than 60 may diverge from the interest rate differentials per cent of the share in terms of volume lent, while due to demand-supply dynamics or various market banks remain on the borrowing side. In market repo, imperfections, creating arbitrage opportunities. which is subdivided into basket repo and special repo When the short-term USD/INR forward premia are segments, PDs are the major borrowers with MFs and considerably wider than the difference between the foreign banks being most active on the lending side. short-term interest rates in India and the US, a bank While the borrowing needs of PDs and banks are driven may borrow in the Indian money market, receive the by their demand for reserves, the lending volume of forward premia (i.e., do a buy-sell USD/INR swap) and MFs in the money market is largely an outcome of lend in USD to earn a risk-free profit to the extent of their investment mandate. Therefore, a heightened the excess forward premia. On the other hand, if the lending activity in the collateralised segment of the short-term USD/INR forward premia are considerably money market by MFs may, to an extent, lead to the narrower than the difference between the short-term fulfilment of demand of PDs and banks for short term interest rates in India and the US, a bank may borrow liquidity, thereby leading to decline in Call volume. in USD, pay the forward premia (i.e., do a sell-buy (iv) Government Flows: The RBI, being the USD/INR swap) and lend in the Indian money market banker to the Government of India (GoI) as well as to earn a risk-free profit to the extent of the deficit to the state governments (except Sikkim), maintains forward premia. While such transactions are subject to their accounts into which taxes and other receipts certain regulatory controls and other market frictions, flow and from which government expenditures and they are expected to positively impact the volumes in other payments are made. Transfers to and from the Call market. the government accounts impact banking system (vii) Market Hours: In the wake of the COVID-19 liquidity. Large outflows to the government by way pandemic, trading hours for various markets regulated of tax collection or auction proceeds reduce banks’ by the Reserve Bank, including the call money market, reserve position, increasing Call market activity, while were truncated. The timings were subsequently inflows to the banking system by way of government normalized in a phased manner. Trading volume in spending or bond maturities inject liquidity into the Call market is expected to be lower during shorter banking system, curtailing the need for banks and PDs market hours due to subdued overall market activity to resort to Call market to seek reserves. In this study, and vice versa. we analyse the impact of large flows to and from the Government of India on a particular day on the Call (viii) RBI Regulations: The Reserve Bank, vide its volume. Master Direction8 dated April 1, 2021, instructed all eligible players in the call money market to acquire (v) Monetary Policy Announcement: Activity in the Call market is expected to spike on the days of the 8 Master Direction - Reserve Bank of India. (Call, Notice and Term Money RBI’s monetary policy announcement as banks may Markets) Directions, 2021, circular no. FMRD. DIRD.02/14.01.001/2021-22 dated April 01, 2021 (Updated as on June 08, 2023) (https://www.rbi.org. choose to re-position their reserve balances ahead or in/Scripts/BS_ViewMasDirections.aspx?id=12061) RBI Bulletin July 2025 79ARTICLE Determinants of Overnight Uncollateralised Money Market Volume - An Empirical Assessment membership of NDS-CALL platform in due course of Table 2: Pairwise Granger Causality Tests time. This is expected to have a negative bearing on Pairwise Granger Causality Tests F-Statistics Probability Call volume as non-members of NDS-CALL were not WACRSPREAD does not Granger Cause CALL 2.812 0.040 able to participate in the market, at least temporarily CALL does not Granger Cause WACRSPREAD 4.520 0.011 till obtaining membership. LAF does not Granger Cause CALL 7.437 0.001 CALL does not Granger Cause LAF 4.911 0.008 V.2. Methodology and Empirical Results TRMR does not Granger Cause CALL 8.528 0.000 The descriptive statistics and the CALL does not Granger Cause TRMR 2.236 0.107 contemporaneous correlation matrix of the variables GOI_POS does not Granger Cause CALL 0.090 0.091 CALL does not Granger Cause GOI_POS 2.742 0.665 considered in the empirical analysis are given in GOI_NEG does not Granger Cause CALL 0.320 0.026 Annex Tables A1 and A2. Augmented Dickey-Fuller CALL does not Granger Cause GOI_NEG 0.240 0.786 (ADF) test was employed for checking stationarity FPREMD does not Granger Cause CALL 1.295 0.041 (mean reverting property) of variables. The variables CALL does not Granger Cause FPREMD 3.208 0.274 were found to be stationary at level (Annex Table A3). MHOURS does not Granger Cause CALL 3.168 0.042 CALL does not Granger Cause MHOURS 0.464 0.629 Prior to developing the model, the pairwise MPC does not Granger Cause CALL 1.313 0.269 granger causality test was employed on the variables CALL does not Granger Cause MPC 0.146 0.864 to understand the usefulness of the determinants REGULATION does not Granger Cause CALL 0.331 0.029 considered for the analysis in predicting the future CALL does not Granger Cause REGULATION 3.534 0.718 values of the response variable i.e., the volume of Source: Authors’ estimates. uncollateralised overnight segment of money market. process. The result of the test suggests that WACR spread over Bollerslev (1986) developed the GARCH (1,1) repo rate and net system liquidity have bidirectional framework, and according to this framework, we relationship with Call market volume while the can estimate the volume of the overnight call money overnight collateralised segment of money market market using the mean equation given below: (TREP and market repo), government inflows and outflows, forward premia divergence, trading hours of CALL β β CALL β WACRSPREAD t t t call money market and the Reserve Bank’s regulation β0 LAF1 β T-1RMR2 β GOI_POS (1) = + t + t 5 t + regarding the mandatory membership in NDS-CALL β3 GOI_NEG4 β FPREMD β MHOURS + t + t + t platform have one-sided granger causality on the β6 MPC β RE7GULATION ε8 9 t + t+ t + overnight call money market segment. The MPC 10 It indicate+s th at the overn+ight volume of announcement do not granger cause the dependent uncollateralised money market at time “t” (CALL) is t variable (Table 2). dependent on its own lag, WACR spread over policy OLS regression estimation often faces the repo rate (WACRSPREAD), net system liquidity challenge of dealing with autocorrelation in volatility (LAF), collateralised segments of money market or volatility clustering when using high frequency data i.e., aggregate volume of triparty repo and market (Annex Table A4). Hence, the GARCH (Generalised repo (TRMR), significant inflows to the government Autoregressive Conditional Heteroskedasticity) model (GOI_POS), significant outflows from the government is suitable as it takes into account the error variance, (GOI_NEG), forward premia divergence (FPREMD), in which the variance follows an autoregressive (AR) market hours (MHOURS), MPC announcement 80 RBI Bulletin July 2025Determinants of Overnight Uncollateralised Money Market Volume - ARTICLE An Empirical Assessment day (MPC), Reserve Bank of India’s direction to all result. However, MPC announcement day impact eligible participants, including cooperative banks, are not significant on overnight unsecured segment to acquire NDS-CALL membership (REGULATION) though the coefficient has the expected sign. and the error term (ε). To avoid potential model t Conditional Variance and News Impact misspecification arising from seasonal effects, all Curve: The estimates of conditional volatilities indicators (excluding dummy variables) have been demonstrate the significance of a properly specified seasonally adjusted prior to analysis. In our model, volatility model. Here, the coefficients of conditional the overnight uncollateralised call money market volatilities ARCH and GARCH impact are positive and volume, collateralised money market volumes and net highly significant (Table 3). The GARCH conditional LAF indicators are considered in ₹ lakh crores unit. volatility graph of overnight call money market We have used six dummy variables which are taking volume shows a downward trend of volatility from the values ‘0’ and ‘1’. Further, the ε is dependent t the beginning of the pandemic to post-pandemic on some lagged information ( ) and conforms to period probably due to factors, such as changes a student’s t-distribution (‘ ’ d–e1grees of freedom) Ω in market uncertainty, policy interventions, and with zero mean and its variance (h). For more robust v t liquidity conditions (Chart 8a). Furthermore, the volatility modelling and better risk estimates for fat volatility model implicitly incorporates the concept tail series, a GARCH model with t-distribution often of a news impact curve that describes how previous outperform a GARCH with normal errors. Table 3: Result of GARCH (1,1) Estimation (0h) (2) t Variable Coefficient Std. Error Z-Statistic Prob. t –1 εH e|Ωre, ~t ht e ,var iance equation is expressed as Dependent Variable: Overnight Call Money Market Volume follows: Mean Equation C 9.020*** 0.414 21.795 0.000 h t α α ε t α h t– (3) CALL(-1) 0.512*** 0.019 26.737 0.000 2 0 1 –1 2 1 WACRSPREAD 1.895*** 0.280 6.771 0.000 Th=e es+timation+ result of GARCH (1,1) model is LAF 0.158*** 0.039 4.080 0.000 displayed in Table 3. TRMR -0.504*** 0.075 -6.723 0.000 FPREMD 0.146* 0.088 1.655 0.098 The result of the above mean equation of GARCH GOI_POS 0.297** 0.137 -2.178 0.029 model suggests that the coefficients of net system GOI_NEG -0.444*** 0.120 -3.684 0.000 liquidity, WACR spread over policy repo rate, inflows MHOURS -0.311** 0.141 2.205 0.028 MPC 0.270 0.255 1.061 0.289 to the government and forward premia divergence are REGULATION -0.695*** 0.223 -3.124 0.002 statistically significant and exhibit expected positive Variance Equation sign, while the volume of the collateralised segments C 0.076*** 0.025 3.070 0.002 of money market i.e., aggregate volume of triparty RESID(-1)^2 0.074*** 0.017 4.365 0.000 GARCH(-1) 0.904*** 0.019 48.485 0.000 repo and market repo, outflows from the government T-Dist. DoF 6.156*** 1.008 6.105 0.000 and truncated market hours have significant expected Residual Diagnostics negative impact. Furthermore, during the period after Adjusted R2 0.73 Akaike Information 3.99 Criterion the regulation of Reserve Bank’s directive to all eligible Log-likelihood -2862 Durbin Watson 1.73 participants for obtaining NDS-CALL membership, Q2 (36) 7.29 (0.69) ARCH-LM 0.73 (0.70) the demand for short term uncollateralised money Note: ***, **, * indicate 1 per cent, 5 per cent and 10 per cent level of significance. market declined, and that is reflected in the above Source: Authors’ estimates. RBI Bulletin July 2025 81ARTICLE Determinants of Overnight Uncollateralised Money Market Volume - An Empirical Assessment (cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:3)(cid:27)(cid:29)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:57)(cid:68)(cid:85)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) (cid:68)(cid:17)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:57)(cid:68)(cid:85)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72) (cid:69)(cid:17)(cid:3)(cid:49)(cid:72)(cid:90)(cid:86)(cid:3)(cid:44)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:38)(cid:88)(cid:85)(cid:89)(cid:72) (cid:523)(cid:139)(cid:144)(cid:3)(cid:3400)(cid:3)(cid:133)(cid:148)(cid:145)(cid:148)(cid:135)(cid:149)(cid:524) (cid:523)(cid:22)(cid:139)(cid:137)(cid:143)(cid:131)(cid:3)(cid:523)(cid:150)(cid:524)(cid:524) (cid:23)(cid:19)(cid:19)(cid:19) (cid:21)(cid:23) (cid:22)(cid:24)(cid:19)(cid:19) (cid:21)(cid:19) (cid:22)(cid:19)(cid:19)(cid:19) (cid:21)(cid:24)(cid:19)(cid:19) (cid:20)(cid:25) (cid:21)(cid:19)(cid:19)(cid:19) (cid:20)(cid:24)(cid:19)(cid:19) (cid:20)(cid:21) (cid:20)(cid:19)(cid:19)(cid:19) (cid:27) (cid:24)(cid:19)(cid:19) (cid:19) (cid:23) (cid:16)(cid:20)(cid:25) (cid:16)(cid:20)(cid:21) (cid:16)(cid:27) (cid:16)(cid:23) (cid:19) (cid:23) (cid:27) (cid:20)(cid:21) (cid:20)(cid:25) (cid:3) (cid:54)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:29)(cid:3)(cid:36)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:86)(cid:183)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17) return shocks affect return volatility. Given that the random walk, with significantly lower forecast errors GARCH model’s news impact curve is symmetric (MAE and RMSE) (Table 4). Furthermore, the Diebold- and centred at E = 0, it can be concluded that Mariano test yields a statistically significant result t conditional volatili-t1y is not asymmetrically affected by providing strong evidence that the proposed model positive or negative return shocks of same magnitude. delivers significantly better forecasts than the random (Chart 8b). walk, thereby validating the model choice. Residual Diagnostics: The residual diagnostics VI. Conclusion for the model’s stability have been checked, and While trade volumes in the collateralised segment those are satisfied (Table 3 and Annex Table A5). The far surpass those in the unsecured interbank market, robustness of the estimation process was confirmed in line with the trends observed in major markets by regression residuals, which mostly stayed within globally, the weighted average call rate remains the the two standard deviations band (Annex Chart A1). operating target of the RBI’s monetary policy as this is V.3. Evaluation of Forecast Accuracy a segment that purely deals in central bank reserves, which monetary policy actions can directly control. The forecasting performance of the proposed Therefore, it is important from the policy perspective GARCH model is evaluated against the random walk to understand the determinants of the volume in the benchmark to assess its relative predictive accuracy. Call market. The proposed GARCH (1,1) model outperforms the Our empirical findings suggest that the net Table 4: Result of Models’ Forecast Accuracy liquidity injection into the banking system and the Random Walk Proposed WACR spread over policy repo rate exhibit a statistically GARCH (1,1) Mean Absolute Error (MAE) 1.51 1.11 significant impact on Call transaction volume. Also, Root Mean Square Error (RMSE) 1.89 1.41 the analysis reveals a significant negative relationship Diebold-Mariano test Statistic = -4.19, p-value<0.001 between the volume of the money market’s 82 RBI Bulletin July 2025 (cid:28)(cid:20)(cid:16)(cid:81)(cid:68)(cid:45) (cid:28)(cid:20)(cid:16)(cid:85)(cid:83)(cid:36) (cid:28)(cid:20)(cid:16)(cid:79)(cid:88)(cid:45) (cid:28)(cid:20)(cid:16)(cid:87)(cid:70)(cid:50) (cid:19)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:19)(cid:21)(cid:16)(cid:85)(cid:83)(cid:36) (cid:19)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:19)(cid:21)(cid:16)(cid:87)(cid:70)(cid:50) (cid:20)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:20)(cid:21)(cid:16)(cid:85)(cid:83)(cid:36) (cid:20)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:20)(cid:21)(cid:16)(cid:87)(cid:70)(cid:50) (cid:21)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:21)(cid:21)(cid:16)(cid:85)(cid:83)(cid:36) (cid:21)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:21)(cid:21)(cid:16)(cid:87)(cid:70)(cid:50) (cid:40)(cid:83)(cid:86)(cid:76)(cid:79)(cid:82)(cid:81)(cid:3)(cid:11)(cid:87)(cid:16)(cid:20)(cid:12) (cid:22)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:22)(cid:21)(cid:16)(cid:85)(cid:83)(cid:36) (cid:22)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:22)(cid:21)(cid:16)(cid:87)(cid:70)(cid:50) (cid:23)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:23)(cid:21)(cid:16)(cid:85)(cid:83)(cid:36) (cid:23)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:23)(cid:21)(cid:16)(cid:87)(cid:70)(cid:50)Determinants of Overnight Uncollateralised Money Market Volume - ARTICLE An Empirical Assessment collateralised segment and the uncollateralised Joshi, H (2004). The Interbank Money Market in India: overnight segment, suggesting that the two segments Evidence on Volatility, Efficacy of Regulatory Initiatives supplement each other. Further, while inflow to the and Implications for Interest Rate Targeting. Reserve government away from the banking system results in Bank of India Occasional Papers, 25 (1, 2 & 3). rise in Call volume, outflows from the government to Mohanty (2012). Money market and monetary the banking system expectedly result in a fall in the operations in India, BIS central bankers’ speeches. volume. Divergence of overnight forward premia from the interest rate differential has a positive impact on Nath, G. C. (2018). Repo market and market repo rate Call volume, suggesting arbitrage by banks during as a collateralised benchmark rate. CCIL Monthly times of such divergence; truncated trading hours Newsletter-August 2018. and the RBI directive dated April 2021 on NDS-CALL Patra, M. D., Kapur, M., Kavediya, R., and Lokare, S. M. membership negatively impacted transaction volume (2016). Liquidity Management and Monetary policy: in the overnight uncollateralised money market, as From corridor play to marksmanship. Monetary Policy anticipated. MPC announcement, however, does not in India (pp. 257-296). Springer, New Delhi. have a significant impact on Call volume. The above findings can serve as a useful guide in fostering RBI (1987). Report of the Working Group on the Money money market and monetary policy reforms in India. Market. Reserve Bank of India. References: RBI (2005). Report of the Technical Group on Money Market. Reserve Bank of India. Bech, M., and Monnet, C. (2016). A Search-based Model of the Interbank Money Market and Monetary RBI (2011), Report of the Working Group on Operating Policy Implementation. Journal of Economic Theory, Procedure of Monetary Policy. Reserve Bank of India. 164, 32-67. RBI (2014). Report of the Expert Committee to Revise Bollerslev, T. (1986). Generalized Autoregressive and Strengthen the Monetary Policy Framework. Conditional Heteroskadasticity. Journal of Reserve Bank of India. Econometrics, 31, 307-327. RBI (2019). Report of the Internal Working Group Corradin, S., Eisenschmidt, J., Hoerova, M., Linzert, T., to Review the Liquidity Management Framework. Schepens, G., and Sigaux, J. D. (2020). Money markets, Reserve Bank of India. central bank balance sheet and regulation (No. 2483). Roy, T. (2023). The Reserve Bank of India: Volume 5, ECB Working Paper. 1997-2008. Cambridge University Press; 2023. Freixas, X., and Holthausen, C. (2001). Interbank Thompson, J. (2003). Intervention by Central Banks in Market Integration and Asymmetric Information. the Money Market. CIBEF, Liverpool Business School, Review of Financial Studies. WP No. 74. Liverpool. Hansen, P. R., and Lunde, A. (2005). A Forecast Comparison of Volatility Models: Does Anything Beat Whitesell, W. (2006). Interest Rate Corridors and A GARCH (1,1). Journal of Applied Econometrics, 20, Reserves. Journal of Monetary Economics.53, 1177- 873-889. 1195. RBI Bulletin July 2025 83ARTICLE Determinants of Overnight Uncollateralised Money Market Volume - An Empirical Assessment Annex Table A1: Descriptive Statistics Mean Std. Dev. Skewness Kurtosis CALL 12.6 4.4 1.9 8.0 WACRSPREAD -0.2 0.4 -0.4 2.0 LAF -2.4 2.9 -0.4 3.2 TRMR 4.2 1.3 -0.5 3.9 Source: Authors’ estimates. Table A2: Contemporaneous Correlation Matrix CALL WACRSPREAD LAF TRMR GOI_POS GOI_NEG FPREMD MHOURS REGULATION MPC CALL Correlation 1 WACRSPREAD Correlation 0.45 1 t-Statistic 17.40 Probability 0.00 LAF Correlation 0.57 0.88 1 t-Statistic 24.10 63.49 Probability 0.00 0.00 TRMR Correlation -0.51 0.01 -0.14 1 t-Statistic -20.37 0.17 -4.71 Probability 0.00 0.86 0.00 GOI_POS Correlation -0.02 0.03 0.05 0.06 1 t-Statistic -0.68 1.17 1.66 2.02 Probability 0.49 0.24 0.10 0.04 GOI_NEG Correlation -0.07 0.01 -0.05 0.10 -0.09 1 t-Statistic -2.41 0.45 -1.76 3.32 -2.99 Probability 0.02 0.65 0.08 0.00 0.00 FPREMD Correlation 0.13 -0.12 -0.04 -0.04 -0.04 0.04 1 t-Statistic 4.67 -4.27 -1.35 -1.38 -1.38 1.43 Probability 0.00 0.00 0.18 0.17 0.17 0.15 MHOURS Correlation -0.36 -0.40 -0.48 0.53 0.01 0.06 0.15 1 t-Statistic -13.27 -14.98 -19.00 21.65 0.33 1.92 5.06 Probability 0.00 0.00 0.00 0.00 0.74 0.06 0.00 REGULATION Correlation -0.11 0.59 0.52 0.54 0.07 0.04 -0.24 -0.21 1 t-Statistic -3.72 25.19 21.15 22.13 2.38 1.33 -8.66 -7.42 Probability 0.00 0.00 0.00 0.00 0.02 0.18 0.00 0.00 MPC Correlation 0.00 -0.01 -0.03 -0.01 0.04 -0.03 -0.01 0.01 -0.01 1 t-Statistic -0.16 -0.41 -0.93 -0.30 1.52 -1.10 -0.50 0.44 -0.39 Probability 0.88 0.68 0.35 0.77 0.13 0.27 0.62 0.66 0.70 Source: Authors’ estimates. 84 RBI Bulletin July 2025Determinants of Overnight Uncollateralised Money Market Volume - ARTICLE An Empirical Assessment Table A3: Unit Root Test - ADF Breakpoint Test with Trend and Intercept Variable t-statistic Probability Call Volume -22.19* 0.000 LAF -5.11* 0.024 WACR Spread -6.48* 0.000 TRMR (TREP + Market Repo) -18.36* 0.000 GOI inflow (+) -25.12* 0.000 GOI outflow (-) -26.11* 0.000 Market Hours -5.18* 0.019 Forward Premia Divergence -14.84* 0.000 MPC -35.94* 0.000 Regulation -34.34* 0.000 Note: * denotes significance at 5 per cent confidence level. Source: Authors’ estimates. Table A4: Breusch-Godfrey Serial Correlation LM Test of OLS Regression F-statistic 4.18 Prob. F(50,166) 0.0000 Obs*R-squared 113.64 Prob. Chi-Square(50) 0.0000 Note: Null hypothesis: No serial correlation at up to 50 lags. Source: Authors’ estimates. Table A5: Multicollinearity Test - Variance Inflation Factor (VIF) Variable Coefficient of Variation VIF CALL 0.00 1.62 WACRSPREAD 0.08 7.19 LAF 0.00 7.28 TRMR 0.01 3.72 GOI_POS 0.01 1.18 GOI_NEG 0.02 1.05 FPREMD 0.01 1.05 MHOURS 0.02 2.41 MPC 0.06 1.02 REGULATION 0.05 7.12 Note: No evidence for multicollinearity since VIF for all the covariates are much less than the value 10. Source: Authors’ estimates. RBI Bulletin July 2025 85ARTICLE Determinants of Overnight Uncollateralised Money Market Volume - An Empirical Assessment (cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:3)(cid:36)(cid:20)(cid:29)(cid:3)(cid:38)(cid:68)(cid:79)(cid:79)(cid:3)(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:3)(cid:178)(cid:3)(cid:36)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:89)(cid:86)(cid:3)(cid:51)(cid:85)(cid:72)(cid:71)(cid:76)(cid:70)(cid:87)(cid:72)(cid:71) (cid:523)(cid:139)(cid:144)(cid:3)(cid:3400)(cid:3)(cid:133)(cid:148)(cid:145)(cid:148)(cid:135)(cid:149)(cid:524) (cid:24)(cid:19)(cid:19)(cid:19)(cid:19) (cid:23)(cid:24)(cid:19)(cid:19)(cid:19) (cid:23)(cid:19)(cid:19)(cid:19)(cid:19) (cid:22)(cid:24)(cid:19)(cid:19)(cid:19) (cid:22)(cid:19)(cid:19)(cid:19)(cid:19) (cid:21)(cid:24)(cid:19)(cid:19)(cid:19) (cid:21)(cid:19)(cid:19)(cid:19)(cid:19) (cid:20)(cid:24)(cid:19)(cid:19)(cid:19) (cid:20)(cid:19)(cid:19)(cid:19)(cid:19) (cid:24)(cid:19)(cid:19)(cid:19) (cid:19) (cid:16)(cid:24)(cid:19)(cid:19)(cid:19) (cid:16)(cid:20)(cid:19)(cid:19)(cid:19)(cid:19) (cid:54)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:29)(cid:3)(cid:36)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:86)(cid:183)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:86)(cid:17) 86 RBI Bulletin July 2025 (cid:28)(cid:20)(cid:16)(cid:81)(cid:68)(cid:45) (cid:28)(cid:20)(cid:16)(cid:85)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:92)(cid:68)(cid:48) (cid:28)(cid:20)(cid:16)(cid:79)(cid:88)(cid:45) (cid:28)(cid:20)(cid:16)(cid:83)(cid:72)(cid:54) (cid:28)(cid:20)(cid:16)(cid:89)(cid:82)(cid:49) (cid:19)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:19)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:19)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:19)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:19)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:20)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:20)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:20)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:20)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:20)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:21)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:21)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:21)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:21)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:21)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:22)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:22)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:22)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:22)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:22)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:23)(cid:21)(cid:16)(cid:81)(cid:68)(cid:45) (cid:23)(cid:21)(cid:16)(cid:85)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:92)(cid:68)(cid:48) (cid:23)(cid:21)(cid:16)(cid:79)(cid:88)(cid:45) (cid:23)(cid:21)(cid:16)(cid:83)(cid:72)(cid:54) (cid:23)(cid:21)(cid:16)(cid:89)(cid:82)(cid:49) (cid:36)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79) (cid:41)(cid:76)(cid:87)(cid:87)(cid:72)(cid:71) (cid:16)(cid:21)(cid:54)(cid:40) (cid:14)(cid:21)(cid:54)(cid:40)Household Inflation Expectations in India: Emerging Trends, ARTICLE Determinants and Impact of Monetary Policy Household Inflation Expectations saving, and investment, directly impacting aggregate demand. Businesses use these expectations to in India: Emerging Trends, set prices and negotiate wages. Therefore, central Determinants and Impact of banks prioritise managing inflation expectations to maintain price stability, especially in the inflation Monetary Policy targeting (IT) framework. by Ankit Ruhi^, Kanupriya Sharma and Household inflation expectations are Subhadhra Sankaran^^ particularly important because households represent the largest and most diverse economic group, directly driving consumption. Unlike Inflation expectations of households experienced professional forecasters, households’ expectations a considerable uptick following the COVID-19 are often shaped by personal experiences and are pandemic, geopolitical tensions and consequential susceptible to fluctuations. Although household economic uncertainty amidst supply chain disruptions and inflationary pressures. Against this backdrop, this inflation expectations have generally moderated article examines emerging trends in household inflation in countries with the adoption of IT, the COVID-19 expectations, their underlying determinants and the pandemic introduced substantial uncertainty with impact of monetary policy interventions. Findings reveal supply chain disruptions and labour market shocks, that improved domestic economic conditions, coupled thereby widening the gap between households and with policy actions, have helped household inflation professional inflation expectations. Given these expectations ebb from the highs witnessed around the recent developments, re-examining emerging trends pandemic. Past inflation perceptions generally tend in household expectations and their determinants is to keep the household expectations sticky. However, crucial for effective policy intervention. influence of realised inflation dynamics increases This study uses unit level data on 1-year ahead when adjusted for extreme values. Headline inflation median inflation expectations from the Reserve is more influential than food inflation, but high and Bank’s Inflation Expectations Survey of Households broad-based food inflation may keep overall expectations (IESH), to understand their dynamics post pandemic, elevated, underscoring the importance of policy emphasis key determinants and effectiveness of monetary on headline inflation. policy in anchoring these expectations, particularly Introduction under the flexible inflation targeting (FIT) regime. Findings reveal a decline in inflation expectations Inflation expectations significantly influence from the highs of 2014, aided by the transition to the economic behaviour and macroeconomic outcomes. FIT regime, easing of global inflationary pressures, They shape individual decisions about consumption, and timely domestic policy interventions. ^ Ankit Ruhi was consultant in the Department of Economic and Policy This is corroborated by a leftward shift in Research (DEPR). ^^ The authors are from DEPR. The views expressed are those of the the distribution of median household inflation authors and do not necessarily reflect those of the RBI. We thank Dr. Sarat expectation (denoting a fall in median expectations Chandra Dhal for his valuable comments and feedback; Arti Sinha, G V Nadhanael, Somnath Sharma, Soumasree Tewari, Shashi Kant and Manu over the years), and reduced disagreement Swarnakar for insightful discussions; Gairika Bannerjee and Ranajoy Guha Neogi for data assistance. among households (as seen from lower standard RBI Bulletin July 2025 87ARTICLE Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy deviations). However, the pandemic reversed this al., 2018; D’Acunto et al., 2024). Recent literature trend, heightening overall inflationary concerns, and outlines the following key determinants of inflation widening the disagreement across groups. Adjusting expectations. for extreme values, we observe that realised inflation A. Behavioural factors: Household inflation dynamics generally exerts a stronger influence, with expectations are influenced by perceived economic broad-based food price inflation playing larger role environment (Jonung, 1981; Cavallo et al., 2017; during high inflation episodes. This suggests that Coibion et al., 2020), with individuals relying on our approach in handling extreme-value adjustments lifetime experiences that may introduce biases due to furthers the understanding and responsiveness of rational inattention and cognitive biases (Lucas 1972, expectations to current economic conditions. 1973; D’Acunto et al., 2021, 2023). Simple decision- The rest of the paper is structured as follows: making rules stemming from habit formation may Section II reviews the related literature. Section III distort expectations causing households to overreact outlines the IESH data and adjustments for extreme or underreact to new information (Schafer, 2022). value observations. Section IV presents stylised facts B. Observed price changes: Households use from unit-level observations in the IESH. Section V changes in the prices of frequently purchased goods, discusses the empirical methodology and results. particularly essentials like food and energy items, to Section VI concludes. gauge overall inflation (Kumar et al., 2015; D’Acunto II. Literature et al., 2021, 2024; Weber et al., 2022; Patzelt and Reis, 2024). Households perceive price increases as more Various theories have explored the role of lasting than declines (Eichenbaum et al., 2011). inflation expectations in shaping actual inflation dynamics and the overall macroeconomy ranging C. Social influences: Herd behaviour, media from adaptive (Friedman, 1968) to rational1 (Muth, exposure and professional forecasts can influence 1961; Lucas, 1973). Variants of rational expectations expectations. While the impact of media is limited, theory consider potential information frictions and households often trust personal family and social networks more than traditional news sources (Caroll, bounded rationality in expectations.2 2003; Binder, 2017; Coibion et al., 2020, 2022; Weber More recently, behavioural models emphasise et al., 2022, Bailey et al., 2018). the role of personal experiences and noticeable D. Individual characteristics: Older individuals price changes. Survey-based measures of household with longer lifetime experiences of inflation and and business inflation expectations offer valuable those with higher economic literacy and income insights into diverse expectations, addressing the levels tend to have more informed inflation limitations of full-information rational expectations expectations (Aguiar and Hurst, 2005; Malmendier (FIRE) that fail to account for the heterogeneity and Nagel, 2016; Coibion et al., 2018, 2020; D’Acunto in agents’ expectation formation and revisions et al., 2021, 2023, 2024). (Sheffrin, 1996; Mankiw et al., 2004; Coibion et E. Monetary policy: Monetary policy actions 1 Also known as full-information rational expectations (FIRE) model (Lucas, 1972, 1976; Taylor, 1979; Calvo, 1983). and central bank communication can shape inflation 2 Commonly known as sticky information or noisy information models expectations by reducing the persistence of inflation (Mankiw and Reis, 2002; Caroll, 2003; Woodford, 2003; Sims, 2003; Coibion and Gorodnichenko, 2015; Coibion et al., 2018). shocks (Mishkin, 2007; Bernanke, 2007; D’Acunto 88 RBI Bulletin July 2025Household Inflation Expectations in India: Emerging Trends, ARTICLE Determinants and Impact of Monetary Policy et al., 2024). Effective communication, like forward have helped manage inflation expectations (Goyal guidance, can help in managing public expectations and Parab, 2019; Asnani et al., 2019; Pattanaik et al., (Mehra and Reilly, 2008; D’Acunto et al., 2021).3 2023; Eichengreen and Gupta, 2024). However, only a few studies have explored issues related to bias F. Domestic and global influences: Domestic adjustment in survey-based expectations (Das et al., geographic location can shape inflation expectations, 2019; Pattanaik et al., 2023).5 with individuals in the same area often experiencing similar price changes and economic conditions Studies on household inflation expectations in (Stroebel and Vavra, 2019). Domestic factors India have mostly focussed on (i) aggregate-level pre- like growth in gross domestic product (GDP), pandemic data; (ii) other inflation measures, such as the Wholesale Price Index (WPI) or Consumer unemployment rates, supply shocks, and monetary Price Index for Industrial Workers (CPI-IW); and policy credibility; as well as global factors like (iii) households’ current perceptions of inflation. commodity price inflation, volatility in exchange These limit insights into the near-term household rates financial markets also affect expectations. expectations and influence of monetary policy. These factors have a greater impact in emerging markets compared to advanced economies (Kose To address these gaps, this article analyses et al., 2019; Moessner, 2021). Nevertheless, while 1-year ahead median inflation expectations during short-term inflation expectations do vary with September 2009 to March 2025 using unit level data business cycles and macroeconomic shocks, long- from the IESH. The study also proposes alternate term expectations remain anchored as long as they ways to adjust for extreme values in the survey-data, are not significantly influenced by fluctuations in rather than the present practice of bunching all high short-term expectations (Posen, 2011). values over 16 per cent to prevent distorting the true distribution of responses. Factors influencing Inflation expectations in India are influenced household inflation expectations are also analysed, by both domestic factors like GDP growth, actual using both the aggregate series (“reported”) and the inflation (headline and core), food and oil prices, adjusted aggregate series (“exclusion”; “trimmed”) monetary policy and fiscal policy; and global calculated from unit-level inflation expectations. factors like international oil prices, exchange rate III. Inflation Expectations Survey of Households fluctuations, policy uncertainty and financial (IESH): Details market volatility.4 Food price shocks, aggregate demand conditions, monetary policy actions, The IESH survey covers about 6,000 households and global shocks significantly shape household across 19 cities, and is being conducted bi-monthly expectations, while the impact of oil price shocks since 2016 (quarterly prior to that).6 Respondents is mixed (Pattanaik et al., 2020). The Reserve Bank’s aged 21+ answer both qualitative and quantitative communication and adoption of the FIT regime questions regarding expected inflation in various 3 Evidence on impact of central bank communication regarding interest 5 Sharma and Bicchal (2018), Shaw et al., (2019) and Shaw (2023) discuss rate decisions on expectations is mixed. The effect of reading official properties of households’ inflation expectations. statements is similar to being informed about inflation target (D’Acunto 6 The IESH survey uses a two-stage random sampling method since 2018. et al., 2020). Prior to that, it used a quota sampling method with a focus on major cities 4 For further details, please refer to Patra and Ray (2010); Goyal and Parab in different regions of India. For further details on the IESH, please refer to (2019); Goyal and Parab (2021); Eichengreen and Gupta (2024); Ghosh et al. Shaw et al., (2019); RBI Bulletin (May 2010); questionnaire, press releases, (2021); Bhattacharya (2023); Pattanaik et al. (2020); Pattanaik et al. (2023). metadata, and unit level data. RBI Bulletin July 2025 89ARTICLE Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy categories for the current month, next three months, only the top 20 per cent of high expectation and next 12 months.7 They choose from expected values, thereby retaining more of the true inflation rates ranging from “0-1 per cent” to “15- values reported by agents (even those above 16 per cent” – in increments of 100 basis points; 16 per cent). “greater than (or equal to) 16 per cent” or “No Idea”. Both methods result in median expectations Adjustment for Extreme Values higher than actual inflation but lower than the The IESH reported series considers all values aggregate reported series (Chart 1; Annex A). We exceeding 16 per cent as 16.5 per cent leading to focus on 1-year ahead inflation expectations in the the median inflation expectation distribution to be reminder of the article.9 bounded between 0.5 per cent and 16.5 per cent, IV. Stylised Facts potentially limiting information from higher values.8 The IESH unit-level data analysis inter alia We propose two alternative methods: exclusion and establishes the following ten facts. trimming. 1. The “Exclusion” series removes respondents 1. Persistent systematic upward bias in household reporting inflation expectations below 1 per expectations cent, above 16 per cent, or “No idea”. Indian household inflation expectations have 2. The “Trimmed” series excludes responses consistently exceeded professional forecasters for below 1 per cent and “No idea”; and removes nearly two decades, notwithstanding stable inflation Chart 1: Comparison of Medians of Inflation Expectations (Per cent) 18 16 14 12 10 8 6 4 2 0 Reported Exclusion Trimmed CPI-Headlline Inflation Notes: "Reported" refers to the published IESH aggregate data. "Exclusion" refers to the series created from the unit-level data by excluding all outliers (No idea, <1, >/≥ 16). "Trimmed" refers to the series created from the unit-level data by excluding low value outliers (No idea, <1) and trimming the data above the 80th percentile of the actual reported value for >/≥16 per cent. Sources: RBI; and Authors’ calculations. 7 Categories include general prices, food, non-food, housing, durables, and services. 8 For other methods of outlier-adjustment, please refer to Das et al., (2019). 9 For analyses using the 3-month ahead inflation expectations, and more exhaustive results on both 3 months ahead and 1 year ahead expectations for reported, exclusion and trimmed series, please refer to Ruhi et al., 2026 (mimeo). 10 Globally, households tend to report higher expectations than the professionals (Weber et al., 2023; D’Acunto et al., 2024). 90 RBI Bulletin July 2025 90-peS 01-raM 01-peS 11-raM 11-peS 21-raM 21-peS 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raMHousehold Inflation Expectations in India: Emerging Trends, ARTICLE Determinants and Impact of Monetary Policy Chart 2: Systemically Upward Bias in Household Expectation a. Comparison with other agents’ expectations b. Comparison across tenors (Per cent) (Per cent) 18 16 14 12 10 8 6 4 2 0 SPF BIES IESH CPI-HeadllineInflation Current 3-months 1-year CPI-Headlline Inflation Notes: 1. Expectations data pertain to 1-year ahead for Business Inflation Expectations Survey (BIES) and IESH; and 3-quarters ahead (closest available to 1-year) for Survey of Professional Forecasters (SPF). 2. Data for BIES are from various press releases since 2017-18:Q3. Prior to that, the midpoint of the range with maximum probability has been taken. Sources: MoSPI (CPI); IIM(A) [BIES]; RBI (SPF, IESH); and Authors’ calculations. periods between 2014-15 and 2019-20 (Chart 2a).10 3. Higher expectations in headline, food and However, expectations shifted downwards in line housing with global inflation and benefitting from the Since 2022, more broad-based inflation concerns transition to the FIT regime11, and proactive fiscal were expressed by households, particularly in measures to address supply side constraints. More headline, food, and housing (Chart 3). recently, in 2024-25:H2, as headline inflation eased, forecasts of both professionals and households show moderation. However, household expectations adjusted at a slower pace. 2. Inflation expectations rise with the forecast horizon, align with high inflation Inflation expectations increase with the forecast horizons (Chart 2b). Nonetheless, expectations across the horizon have seen a downward shift since 2014-15 with the announcement of the glide-path and easing inflation levels. The wedge between 3-month and 1-year expectations has also considerably narrowed, notwithstanding the increase since 2023-24. 11 The glide-path towards the FIT regime was announced in 2013-14: Q4. RBI Bulletin July 2025 91 90-peS 01-raM 01-peS 11-raM 11-peS 21-raM 21-peS 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raM 18 16 14 12 10 8 6 4 2 0 90-peS 01-raM 01-peS 11-raM 11-peS 21-raM 21-peS 31-raM 31-peS 41-raM h TIt Fap oe tdilG 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM cimednaP 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raM Chart 3: Inflation Expectations across Groups Note: Lighter colors indicate fewer proportion of households expecting price increases. Sources: IESH, RBI; and Authors’ calculations.ARTICLE Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy 4. Headline matters more than food inflation; but broad-based food inflation keeps expectations elevated Inflation expectations move more closely with headline rather than food inflation (Chart 4a). During high inflation periods, when food inflation is not a major contributor (between June 2017 to June 2018 in Chart 4b), it can help limit the spike in overall inflation expectations. Conversely, during periods of low headline inflation, higher food inflation can hinder easing of expectations (during 2022-23: Q4 and 2023-24: Q2 in Chart 4b). Conforming to their global counterparts, during periods of high inflation, Indian households focus on volatility rather than merely increase in food prices (Charts 4c and 4d) [Coibion and Chart 4: Inflation, Price Volatility and Inflation Expectations a. Headline and Food Inflation b. Frequent and Persistent Shocks to Food Groups (Per cent) (Per cent) 18 14 10 6 2 -2 CPI-Headlline Inflation CPI-Food Inflation Inflation Expectations Cumulative weights for food group (RHS) Inflation Expectations Cumulative weights (RHS) c. Relative Food Price Volatility d. Correlation of Inflation Expectations with Food Price Volatility (Per cent, Standard Deviation) (Correlation) Inflation Expectations RPV Food (RHS) Rolling Correlation (IE and RPV) Notes: 1. Cumulative weights refer to weights of CPI basket items with more than 6 per cent inflation. 2. Relative Food Price Volatility (RPV Food) is calculated as weighted standard deviation of food and beverages group items’ inflation over headline inflation (Pattanaik et al., 2023). 3. Rolling correlation is calculated for inflation expectations and relative food price volatility, with a 3-year window size. Sources: MOSPI; RBI; and Authors’ calculations. 92 RBI Bulletin July 2025 21-ceD 31-luJ 41-beF 41-peS 51-rpA 51-voN 61-nuJ 71-naJ 71-guA 81-raM 81-tcO 91-yaM 91-ceD 02-luJ 12-beF 12-peS 22-rpA 22-voN 32-nuJ 42-naJ 42-guA 52-raM 18 100 16 90 14 80 12 70 60 10 50 8 40 6 30 4 20 2 10 0 0 21-ceD 31-luJ 41-beF 41-peS 51-rpA 51-voN 61-nuJ 71-naJ 71-guA 81-raM 81-tcO 91-yaM 91-ceD 02-luJ 12-beF 12-peS 22-rpA 22-voN 32-nuJ 42-naJ 42-guA 52-raM 17 140 15 120 100 13 80 11 60 9 40 7 20 5 0 21-ceD 31-luJ 41-beF 41-peS 51-rpA 51-voN 61-nuJ 71-naJ 71-guA 81-raM 81-tcO 91-yaM 91-ceD 02-luJ 12-beF 12-peS 22-rpA 22-voN 32-nuJ 42-naJ 42-guA 52-raM 0.8 0.4 0.0 -0.4 -0.8 -1.2 21-ceD 31-luJ 41-beF 41-peS 51-rpA 51-voN 61-nuJ 71-naJ 71-guA 81-raM 81-tcO 91-yaM 91-ceD 02-luJ 12-beF 12-peS 22-rpA 22-voN 32-nuJ 42-naJ 42-guA 52-raM Gorodnichenko, 2015; Coibion et al., 2018]. In recent times, as inflationary concerns have moderated since the pandemic, expectations are gradually moderating, albeit, remaining above the pre-pandemic levels. 5. Multimodal distribution with expectations rounded to multiples of five The distribution of median inflation expectations consistently exhibits multiple modes, with many respondents rounding off their expectations between 5 and 10 per cent, in line with global behaviour (Binder, 2015; Reiche and Meyler, 2022; Haidari and Nolan, 2022) [Chart 5]. Since the introduction of the FIT regime, expectations have generally shifted down. Pandemic and the Russia-Ukraine War Food Inflation SlowdownHousehold Inflation Expectations in India: Emerging Trends, ARTICLE Determinants and Impact of Monetary Policy induced disturbances, and resultant uptick in the 8. Improved anchoring of city-wise expectations in expectations, have been gradually moderating as FIT regime observed from lower peaks in the distributions (right City-wise household expectations show a tail) after 2022. marked decline under the FIT regime, suggesting a 6. Leftward shift in distribution post-FIT broader anchoring of expectations (Chart 7a). Since the onset of the COVID-19 pandemic, expectations Since the transition to the FIT regime, more have increased compared to the pre-pandemic households report values below 16 per cent, which levels (Chart 7b). Nevertheless, the consistently has led to a corresponding leftward shift of the lower expectations during the FIT regime suggest a distribution (Chart 5 and Chart 6). However, shocks perceived credibility in the framework. since the pandemic and escalated geopolitical 9. Indian women do not show consistent upward tensions shifted the distributions more to the right. bias; higher expectations from older, and variable Nevertheless, the distributions are gradually moving income households back to left since 2023-24. Generally, women consistently exhibit higher 7. Reduced uncertainty in FIT regime inflation expectations influenced by frequent The share of responses in ‘>=16 per cent’ and shopping exposure (Jonung, 1981; Bryan and ‘No Idea’ categories are lower during the FIT regime, Venkatu, 2001; Coibion et al., 2020; D’Acunto et indicating lower uncertainty among households al., 2024). Indian household inflation expectations, (Chart 6). However, the pandemic and ensuing higher however, do not reflect this sustained upward bias inflationary pressures led to an increase in the share for women (Chart 8a). Older individuals (45 and of higher value response. Since 2021-22, with largely above) report higher expectations largely reflecting easing inflation, this share has moderated. their lifetime experiences (Chart 8b). Chart 6: Share of Respondents (Share in per cent, Per cent) 100 16 90 14 80 12 70 10 60 50 8 40 6 30 4 20 2 10 0 0 No idea IE <= 1 1< IE <16 IE >= 16 CPI Headline Inflation (RHS) Notes: 1. The shaded bars represent the values of inflation expected by households (in per cent). 2. Reported values of inflation expectations (IE) are grouped as: No idea, inflation expected to be less than or equal to 1 per cent (IE <= 1), between 1 and 16 per cent (1 < IE < 16) and greater than or equal to 16 per cent (>=16 per cent). Sources: MoSPI; IESH, RBI; and Authors’ calculations. RBI Bulletin July 2025 93 90-peS 01-raM 01-peS 11-raM 11-peS 21-raM 21-peS 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raM Chart 5: Distributions Showing Multimodality of Inflation Expectations 2010 2016 2019 2020 2022 2024 2025 0.0 2.5 5.0 7.5 10.0 12.5 15.0 17.5 Density Distributions Notes: 1. Data pertain to unit-level IESH observations for March. 2. While this holds in general, only selected years are depicted above for clarity. These years reflect pre and post behaviour in relation to the introduction of the FIT regime, and the COVID-19 pandemic. Sources: IESH, RBI; and Authors’ calculations.ARTICLE Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy Chart 7: City-wise Inflation Expectations and the FIT Regime a. Expectations stabilised under FIT b. Elevated expectations since the pandemic (Per cent) (Per cent) 16 14 12 10 8 6 4 2 0 2014-15 2019-20 Note: Data pertain to averages of 1-year ahead median inflation expectations from various rounds in the respective fiscal years. For clarity purpose, data pertaining to 2014-15, 2019-20 and 2024-25 have been shown, but the pattern remains similar across the years. Sources: IESH, RBI; Authors’ calculations. Daily wage earners express relatively greater salaried employees, likely influenced by fixed budget inflation concerns in the pre-pandemic period than and variable income constraints (Chart 8c). While post 94 RBI Bulletin July 2025 itahawuG rupiaJ antaP ihleD iabmuM urulagneB rupgaN rawsenabuhB aidnI llA murdnavirT lapohB dabademhA wonkcuL atakloK iannehC dabaredyH 16 14 12 10 8 6 4 2 0 2019-20 2024-25 itahawuG rupiaJ antaP ihleD iabmuM urulagneB rupgaN rawsenabuhB aidnI llA murdnavirT lapohB dabademhA wonkcuL atakloK iannehC dabaredyH Chart 8: Inflation Expectations across Demographic Groups a. Gender b. Age groups (Per cent) (Per cent) 18 16 14 12 10 8 6 c. Selected Professions (Per cent) Notes: 1. For the reported aggregate series, data on median is available from 2012 onwards. 2. Inflation expectations are represented as one-year moving average. 3. Salaried financial and non-financial refer to financial sector employees and other employees, respectively. Sources: IESH, RBI; and Authors’ calculations. 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raM 18 16 14 12 10 8 6 Female Male 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raM Up to 25 25-35 35-45 45-55 55+ 18 16 14 12 10 8 6 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raM Daily Workers Self-Employed Homemakers Retired Salaried Non-Financial Salaried FinancialHousehold Inflation Expectations in India: Emerging Trends, ARTICLE Determinants and Impact of Monetary Policy pandemic inflationary pressures led to higher overall show lower disagreement levels than the reported expectations, younger individuals, homemakers and expectations. Across cohorts, generally, male salaried professionals seem to have better anchored respondents, older individuals (45+; retirees) and expectations. households with variable incomes (daily workers, self-employed) exhibit higher disagreement. 10. Disagreement in inflation expectations widens post pandemic V. Factors influencing household inflation expectations in India: Empirical Results Disagreement in inflation expectations reflects the uncertainty and volatility in responses, An important question for policy makers is: particularly during inflationary shocks (Coibion and what are the main factors influencing household Gorodnichenko, 2012).12 The falling disagreement inflation expectations in India? To explore this, we since the transition to the FIT regime was reversed look at 1-year ahead inflation expectations from the with the rising inflation since 2018-19, followed by IESH along with its possible explanatory variables. the pandemic pressures (Chart 9). At the aggregate As discussed in Sections II to IV, not only key level, exclusion and trimmed inflation expectations macroeconomic variables, but also the persistence Chart 9: Disagreement in Inflation Expectations a. Aggregate b. Gender (Standard Deviation, Per cent) (Standard Deviation) 9 16 8 14 7 12 6 10 5 8 4 6 3 4 2 2 1 0 IESH Exclusion Trimmed CPI-Headlline Inflation (RHS) c. Age Groups d. Selected Professions (Standard Deviation) (Standard Deviation) Notes: 1. Disagreement is measured as standard deviation of inflation expectations across responses. 2. Disagreement levels are represented as one-year moving averages. Sources: RBI; and Author’s calculations 12 Disagreement in inflation expectations is measured as standard deviation of expectations across agents. RBI Bulletin July 2025 95 90-peS 01-rpA 01-voN 11-nuJ 21-naJ 21-guA 31-raM 31-tcO 41-yaM 41-ceD 51-luJ 61-beF 61-peS 71-rpA 71-voN 81-nuJ 91-naJ 91-guA 02-raM 02-tcO 12-yaM 12-ceD 22-luJ 32-beF 32-peS 42-rpA 42-voN 6.0 5.5 5.0 4.5 4.0 3.5 3.0 Female Male 90-peS 01-raM 01-peS 11-raM 11-peS 21-raM 21-peS 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raM 6.0 5.5 5.0 4.5 4.0 3.5 3.0 up to 25 25-35 35-45 45-55 55+ 90-peS 01-raM 01-peS 11-raM 11-peS 21-raM 21-peS 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raM 6.0 5.5 5.0 4.5 4.0 3.5 3.0 Daily workers Self-Employed Homemakers Retired Salaried Non-Financial Salaried Financial 90-peS 01-raM 01-peS 11-raM 11-peS 21-raM 21-peS 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raMARTICLE Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy and volatility of food prices are likely to influence : captures aggregate economic households’ short-term inflation expectations (up conditions;15 to 1 year). Our sample combines the median short- effective policy rate : weighted average call rate t term inflation expectations from the IESH with (WACR)16 net of headl–i1ne CPI-C inflation; quarterly macroeconomic variables and variants of : dummy variable takes a value 1 for the FIT their moments. The data is quarterly, spanning from regime since 2014-15: Q1, and 0 otherwise17; and 2009-10:Q2 to 2024-25:Q4. : is the error term. To ensure robustness and capture a broader Additionally, to account for supply shocks, we range of respondents’ perspectives, we use inflation include: (1) , the aggregate deviation of expectations from (i) the reported IESH series, (ii) rainfall from normal (per cent); (2) , a series that excludes extreme values (particularly the relative price volatility (RPV) of food items in those exceeding 16 percent) [Exclusion series], and the CPI basket;18,19 (3) Brent crude oil price inflation (iii) a series with the top 20th percentile trimmed (y-o-y per cent) in rupee terms ( ) to capture (Trimmed series).13 both global commodity price pressures and domestic V.1. Specification logistics factors, which partially reflect exchange rate developments;20 and (4) liquefied petroleum gas The benchmark model, estimated using (LPG) price inflation (y-o-y per cent) [ ] to capture Generalised Method of Moments (GMM)14, is of the the effects of domestic fuel prices.21 following form. For a given time t, For demand-side influences, we use growth in personal loans22 ( ) and alternatively, spread where, 15 Output gap is calculated as the log difference of actual and potential GDP as per cent of log potential GDP in real terms. Potential GDP is calculated : 4-quarters ahead median inflation expectations using Hodrick–Prescott filter. Since the GDP data becomes available with a lag of almost two quarters, is considered at time t– . (per cent), given information at time t. 16 In India, the effective policy rate has fluctuated between the repo and 2 reverse repo rates, reflecting prevailing liquidity conditions and policy : captures the influence of past inflation stance. Hence, WACR is used as a proxy (Khundrakpam, 2011; Kapur and Behera, 2012). expectations; 17 The Reserve Bank adopted a glide path towards the FIT regime in : headline CPI-C inflation [year-on-year (y-o-y) January, 2014, following the recommendations of an expert committee. The FIT framework was formally implemented in February 2015. To per cent] to assess the influence of recent inflation account for a potential adjustment period, we assume that the FIT regime began in 2014-15: Q1. dynamics; 18 RPVFood is calculated as weighted standard deviation of food and t beverages group items’ inflation over headline inflation (Pattanaik et al., –1 13 Descriptions on the calculations of Exclusion and Trimmed series are 2023). provided in Section III. 19 Estimates using WPI food inflation were found insignificant. 14 We employ GMM regression framework to address the endogeneity 20 Estimates using Real Effective Exchange Rate (36-currency trade- issue and account for the potential information set of agents, using four weighted) [REER] instead of Brent crude oil suggest that exchange rate consecutive lags of variables as instruments (to restrict the information movements are likely to matter more for informed professionals and set of agents to past one year). The GMM estimators can produce efficient businesses rather than households (Annex C Table C2). and unbiased estimates even in the presence of heteroscedasticity of unknown form. Moreover, GMM maintains its efficiency in over- 21 LPG prices are calculated as the average of prices for the 19kg cylinder identified models, where the number of instruments exceeds the number (pre-subsidy) in the four major cities of Delhi, Mumbai, Kolkata, and of explanatory variables, provided that the over-identifying restrictions (or Chennai. Data for the 14.2kg cylinder is available only from 2014 onwards instruments) are valid. The Sargan-Hansen J test confirms the validity of and is largely incorporated in the CPI already. Results with LPG 19kg these instruments by verifying that they are uncorrelated with the error cylinder price inflation are provided in Annex C Table C1. term (Baum et al., 2003). 22 Deflated using headline CPI-C index. 96 RBI Bulletin July 2025Household Inflation Expectations in India: Emerging Trends, ARTICLE Determinants and Impact of Monetary Policy between the weighted average lending rate (WALR) Table 1: Benchmark Model: Median Inflation on fresh rupee loans and the WACR ( ), Expectations indicating credit availability and cost of borrowed Sample period: 2009-10: Dependent variable: 1-year ahead Q2 – 2024-25: Q4 expectation ( ) funds, respectively. These variables are combined to Independent variables: Reported Exclusion Trimmed complement our benchmark models and facilitate (1) (2) (3) robustness checks.23 Data sources include RBI; MoSPI; 3.918*** 4.220*** 5.879*** (1.571) (0.878) (1.031) CEIC; Indian Oil Corporation Ltd. (IOCL); and U.S. 0.534*** 0.494*** 0.263** Energy Information Administration (EIA).24 (0.152) (0.069) (0.102) 0.276 0.135*** 0.291** V.2. Results (0.161) (0.035) (0.110) -0.067 -0.143*** -0.045*** The following section discusses the results based (0.090) (0.031) (0.041) on a combination of models on Reported, Exclusion 0.061 0.081*** 0.065*** (0.055) (0.010) (0.016) and Trimmed series of expectations (Tables 1-2, -0.778* -0.145** -0.296** Annex C). Exclusion and Trimmed series are also (0.420) (0.214) (0.331) Adjusted-R2 0.702 0.715 0.636 referred to as adjusted series. J-statistic 5.952 10.825 10.020 a) Behavioural factors - priors and perceptions Prob (J-statistic) 0.745 0.820 0.865 DW-statistic 2.493 2.459 2.221 of inflations: The magnitude of persistence of Long-run impact inflation expectations ( ) is nearly halved as 8.408 8.340 7.977 we move from the reported to adjusted series. A 0.592 0.267 0.395 -0.144 -0.283 -0.061 percentage point increase in past expectations boosts Notes: 1. Instrumental variables used include instruments for: household expectations by about 46-72 basis points (1 to 2 lags); and (1 to 4 lags); (1 to 5 lags). (bps)25 in case of the reported series, while it wanes 2. Figures in parentheses indicate standard errors. to around 17-49 bps for the adjusted series. 3. *, **, *** denote significance levels at 10, 5 and 1 per cent, respectively. b) Past inflation dynamics: rational aggregate demand conditions improve. The reported inattention? A percentage point increase in past series caps all higher expectations at 16.5 per inflation drives adjusted inflation expectations by cent, likely limiting the ability of macroeconomic up to 11-39 bps. By adjusting for extreme values, we determinants to influence inflation expectations. find that influence of realised inflation dynamics increases, while that of past inflation expectations d) Monetary policy actions, communications generally decreases. and framework: The effective policy rate has a significant negative impact on adjusted inflation c) Domestic economic conditions: The output expectations. Further, transition to the FIT regime has gap has a positive impact on adjusted inflation generally led to lower inflation expectations, ranging expectations, suggesting that households revise their from 0.15 to 2.5 percentage points decline, suggestive inflation expectations upward as the economy’s of better anchoring of expectations by monetary 23 For detailed results for both 3-months and 1-year ahead expectations, policy. However, this period also witnessed timely please refer to Ruhi et al., 2026 (mimeo). fiscal measures like export bans by the government, 24 Summary statistics of the variables are presented in Annex B Table B1. 25 A basis point is one-hundredth of a percentage point. and largely lower global inflationary pressures during RBI Bulletin July 2025 97ARTICLE Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy 2014-20, even though households may have limited elevate household inflation expectations in some of awareness of specific policy measures.26 the models. But their combined occurrence affects e) Supply shocks: Both abnormal rainfall and these expectations significantly in all cases, albeit higher volatility of food prices tend to independently with a small positive magnitude (Table 2). This Table 2: Models with supply and demand shocks Sample period: 2009-10: Dependent variable: 1-year ahead expectation ( ) Q2 – 2024-25: Q4 Independent variables: Reported Exclusion Trimmed (1) (2) (3) (4) (5) (6) 5.808*** 6.219** 4.273*** 7.709*** 5.630*** 9.382*** (1.752) (2.595) (0.669) (0.923) (0.547) (1.705) 0.666*** 0.457*** 0.405*** 0.345*** 0.370*** 0.321*** (0.146) (0.124) (0.089) (0.055) (0.041) (0.073) 0.048 0.019** 0.159** 0.248*** 0.265*** 0.247*** (0.286) (0.178) (0.067) (0.065) (0.035) (0.048) -0.140 -0.115 -0.100*** -0.240*** -0.142*** -0.276*** (0.162) (0.124) (0.036) (0.033) (0.021) (0.062) 0.045 0.039 0.052*** 0.036*** 0.056*** 0.046** (0.030) (0.035) (0.009) (0.008) (0.009) (0.021) -2.092** -2.460*** -0.825*** -0.481*** -1.139*** -1.991*** (0.973) (0.860) (0.670) (0.286) (0.226) (0.356) 0.009** 0.007 0.006*** 0.008* 0.009*** 0.009** (0.004) (0.006) (0.002) (0.003) (0.003) (0.004) 0.009 0.002 0.007*** 0.001 0.004* 0.003 (0.007) (0.005) (0.002) (0.003) (0.003) (0.003) 0.001* 0.001* 0.001*** 0.001*** 0.001** 0.002* (0.000) (0.000) (0.000) (0.000) (0.002) (0.000) 0.004** 0.001 0.001* 0.003** 0.001 0.001* (0.003) (0.000) (0.001) (0.001) (0.001) (0.001) 0.014 0.015* 0.003* (0.031) (0.010) (0.009) -0.094 -0.346*** -0.450* (0.188) (0.061) (0.219) Adjusted-R2 0.530 0.689 0.480 0.416 0.664 0.62 J-statistic 10.202 9.953 12.189 11.064 11.531 10.266 Prob (J-statistic) 0.807 0.823 0.967 0.983 0.994 0.946 DW-statistic 2.635 2.456 2.433 2.392 2.610 2.620 Long-run impact 17.389 11.453 7.182 11.769 8.937 13.817 0.144 0.035 0.267 0.379 0.421 0.364 -0.419 -0.212 -0.168 -0.366 -0.225 -0.406 Notes: 1. Instrumental variables used include instruments for: (1 to 2 lags); , and RPVFood (1 to 4 lags); (1 to 5 lags); t and (1 to 3 lags); and (1 to 2 lags). –1 2. Figures in parentheses indicate standard errors. 3. *, **, *** denote significance levels at 10, 5 and 1 per cent, respectively. 26 The IESH does not capture information on households’ awareness about the Reserve Bank, its monetary policy functioning, cognitive abilities, or exposure to media and social interactions related to policy or inflation dynamics. While the questionnaire includes questions about education, this data is not publicly available. 98 RBI Bulletin July 2025Household Inflation Expectations in India: Emerging Trends, ARTICLE Determinants and Impact of Monetary Policy suggests that while food volatility itself may not be as gender, age, and professional background play a major concern, it can significantly impact inflation significant roles. Notably, men, older individuals (45 expectations during excess rainfall periods or vice and above), self-employed and daily workers, who versa.27, 28 often operate on variable incomes, exhibit higher inflation expectations. In contrast, younger and In line with the stylised facts 3 and 4, and given salaried individuals show less disagreement and are the significant weight of food in the CPI basket (45.86 more attuned to realised inflation dynamics, likely per cent), the RBI should continue to consider food reflecting their exposure to financial and social price dynamics in its monetary policy to balance network. social welfare and economic objectives.29 Oil prices generally have small significant positive effect, Transition to the FIT regime, along with timely suggesting sensitivity of expectations to oil price fiscal interventions such as export bans and lower changes (Table 2; Annex C). import duties, and moderating inflation levels have contributed to decline in both the levels of f) Demand shocks: Do easier access to credit expectations and disagreement across responses. or lower loan interest rates influence expectations? However, supply shocks and global inflation shocks We find that personal loan growth generally has a induced by the pandemic and geopolitical tensions positive and significant effect on adjusted inflation have elevated the inflation expectations, particularly expectations (Table 2). The spread between WALR and across headline, food and housing categories. High WACR has a negative effect on adjusted expectations, food inflation during periods of high inflation may indicating households associate higher credit costs keep the expectations elevated, even as headline with weaker demand and lower future inflation. matters more for inflation expectations. Nonetheless, g) Long-run impact: Both past realised inflation most recently, as inflation has been showing signs of and policy rate exert stronger long-term influence on easing, expectations of households have also come household inflation expectations. While households down. may rely on personal perceptions and economic Empirically, macroeconomic shocks, especially conditions in the short term, they give greater volatility of food price, play a prominent role weight to inflation history (life experiences) and in influencing short-term (up to 1-year ahead) monetary policy in the long-term, highlighting the household expectations, especially during adverse critical role of monetary policy in anchoring inflation weather conditons. Consistent with global findings, expectations. these results emphasise the importance of targeting VI. Conclusion headline inflation to effectively manage expectations This study analyses Indian household inflation and improve social welfare.30 Nevertheless, the expectations, revealing that they remain elevated impact of monetary policy is significant even when compared to those of professionals, even during we include higher values of expectations in trimmed periods of price stability. Demographic factors such series. The transition to the FIT regime has aided in anchoring inflation expectations. 27 Goyal and Parab (2021), De Pooter et al. (2014), Armantier et al. (2016). 28 This result holds even for the pre-Covid pandemic period till 2019-20 30 D’Acunto et al. (2024) argue that central banks should focus more on [Ruhi et al., 2026 (mimeo)]. overall inflation rather than just core inflation since consumers tend to 29 Patra and Ray (2010); Pattanaik et al. (2019); Eichengreen and Gupta base their inflation expectations relatively more on prices of frequently (2024). purchased items. RBI Bulletin July 2025 99ARTICLE Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy Given the evidence of non-rationality and Economics Workshop of the National Bureau of heterogeneity across different groups of households Economic Research Summer Institute, Cambridge, – each reflecting their systematic biases – the role Massachusetts (Vol. 10, p. 11). of monetary policy becomes critical in managing Bhattacharya, R. (2023). Does Monetary Policy in inflation expectations. This, in turn, underscores the India Anchor Inflation Expectation?. NIPFP Working challenges of effective policy communication, making Paper Series, No. 395. it essential to understand how these expectations Binder, C. C. (2017). Measuring Uncertainty Based on are shaped and managed. The study also emphasises Rounding: New Method and Application to Inflation the need for further refinement in inflation surveys Expectations. Journal of Monetary Economics, 90(C): and adjustment techniques to capture the dynamics 1–12. of household inflation expectations more accurately. Bryan, M.F. and Venkatu, G. (2001). The Demographics References of Inflation Opinion Surveys. Economic Commentary. Aguiar, M. and Hurst, E. (2005). Consumption versus Calvo, G. A. (1983). Staggered Prices in a Utility- Expenditure. Journal of Political Economy 113(5), Maximizing Framework. Journal of Monetary 919–948. Economics, Elsevier. Vol. 12(3), 383-398. Andrade, P., Gautier, E. and Mengus, E. (2020). What Carroll, C. D. (2003). Macroeconomic Expectations of Matters in Households’ Inflation Expectations?. Households and Professional Forecasters. Quarterly Banque de France Working Paper No. 770. Journal of Economics, 118(1), 269-298. Armantier, O., Nelson, S., Topa, G., van der Klaauw, Casas, I., and Fernández-Casal, R. (2022). tvReg: Time- W. and Zafar, B. (2016). The Price is Right: Updating varying Coefficients in Multi-Equation Regression in Inflation Expectations in a Randomized Price R. R Journal, 14(1). Information Experiment. The Review of Economics Cavallo, A., Cruces, G. and Perez-Truglia, R. (2017). and Statistics, MIT Press Vol. 98(3). 503-523. Inflation Expectations, Learning, and Supermarket Asnani, S., Kumar, P. and Tomar, S. (2019). Does Prices: Evidence from Survey Experiments. American Inflation Targeting Anchor Inflation Expectations? Economic Journal: Macroeconomics, 9(3): 1–35. Evidence From India. The Indian Statistical Institute Coibion, O., and Gorodnichenko, Y. (2012). What Working Paper. Can Survey Forecasts Tell Us about Information Bailey, M., Cao, R., Kuchler, T. and Stroebel, J. (2018). Rigidities?. Journal of Political Economy, 120(1), The Economic Effects of Social Networks: Evidence 116–159. from the Housing Market. Journal of Political ----- (2015). Information Rigidity and the Expectations Economy 126(6), 2224–2276. Formation Process: A Simple Framework and New Baum, C. F., Schaffer, M. E., and Stillman, S. (2003). Facts. American Economic Review, 105(8), 2644-2678. Instrumental Variables and GMM: Estimation and Coibion, O., Gorodnichenko, Y. and Kamdar, R. Testing. The Stata Journal, 3(1), 1-31. (2018). The Formation of Expectations, Inflation, and Bernanke, B. S. (2007). Inflation Expectations and the Phillips Curve. Journal of Economic Literature, Inflation Forecasting. In Speech at the Monetary 56(4), 1447-1491. 100 RBI Bulletin July 2025Household Inflation Expectations in India: Emerging Trends, ARTICLE Determinants and Impact of Monetary Policy Coibion, O., Gorodnichenko, Y., Kumar, S. and Eichenbaum, M., Jaimovich, N. and Rebelo, S. (2011). Pedemonte, M. (2020). Inflation Expectations as a Reference Prices, Costs, and Nominal Rigidities. Policy Tool?. Journal of International Economics, American Economic Review, 101(1), 234–62. Elsevier, vol. 124. Eichengreen, B., and Gupta, P. (2024). Inflation Coibion, O., Gorodnichenko, Y. and Weber, M. (2022). Targeting in India: A Further Assessment. NCAER Monetary Policy Communications and Their Effects Working Paper No. 174. on Household Inflation Expectations. Journal of Friedman, M. (1968). The Role of Monetary Policy. Political Economy, 130(6), 1537-1584. American Economic Review, 58, 1-17. Coibion, O., Gorodnichenko, Y., Knotek, E.S. and Ghosh, T., Sahu, S., and Chattopadhyay, S. (2021). Schoenle, R. (2023). Average Inflation Targeting Inflation Expectations of Households in India: Role and Household Expectations. Journal of Political of Oil Prices, Economic Policy Uncertainty, and Economy Macroeconomics, University of Chicago Spillover of Global Financial Uncertainty. Bulletin of Press. vol. 1(2), 403-446. Economic Research, 73(2), 230-251. Crump, R. K., Eusepi, S., Tambalotti, A. and Topa, G. (2022). Subjective Intertemporal Substitution. Goyal, A., and Parab, P. M. (2019). Modeling Journal of Monetary Economics, 126, 118-133. Consumers’ Confidence and Inflation Expectations. Economics Bulletin, 39(3), 1817-1832. D’Acunto, F., Malmendier, U., Ospina, J. and Weber, M. (2021). Exposure to Grocery Prices and Inflation ----- (2021). What Influences Aggregate Inflation Expectations. Journal of Political Economy 129(5), Expectations of Households in India?. Journal of 1615–1639. Asian Economics, 72, 101260. D’Acunto, F., Malmendier, U. and Weber, M. Haidari, Y., and Nolan, G. (2022). Sentiment, (2023). What Do the Data Tell Us About Inflation Uncertainty and Households’ Inflation Expectations. Expectations?. Handbook of Economic Expectations, Reserve Bank of Australia Bulletin, September. 133-161. Jonung, L. (1981). Perceived and Expected Rates D’Acunto, F., Charalambakis, E., Georgarakos, of Inflation in Sweden. The American Economic D., Kenny, G., Meyer, J., and Weber, M. (2024). Review, 71(5), 961-968. Household Inflation Expectations: An Overview of Kapur, M., and Behera, H. K. (2012). Monetary Recent Insights for Monetary Policy. Becker Friedman Transmission Mechanism in India: A quarterly Institute for Economics Working Paper No. 2024-66. model. Reserve Bank of India Working Paper 09. Das, A., Lahiri, K. and Zhao, Y. (2019). Inflation Khundrakpam, J. (2011). Credit Channel of Monetary Expectations in India: Learning from household tendency surveys. International Journal of Transmission in India - How Effective and Long is Forecasting, 35(3), 980-993. the Lag?. MPRA Paper 50899. De Pooter, M., P. Robitaille, I. Walker, and M. Zdinak Kose, M. A., Matsuoka, H., Panizza, U., and Vorisek, D. (2014). Are Long-Term Inflation Expectations Well (2019). Inflation Expectations: Review and Evidence. Anchored in Brazil, Chile, and Mexico?. International World Bank Group Policy Research Working Paper Journal of Central Banking, 10(2), 337-400. No. WPS 8785. RBI Bulletin July 2025 101ARTICLE Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy Kumar, S., Afrouzi, H., Coibion, O. and Gorodnichenko, Pattanaik, S., Muduli, S., and Ray, S. (2020). Inflation Y. (2015). Inflation Targeting Does Not Anchor Expectations of Households: Do They Influence Inflation Expectations: Evidence from Firms in New Wage-Price Dynamics in India?. Macroeconomics and Zealand. NBER Working Paper No. 21814. Finance in Emerging Market Economies, 13(3), 244- Lucas, R. E. (1972). Expectations and the Neutrality 263. of Money. Journal of Economic Theory, 4(2), 103-124. Pattanaik, S., Nadhanael, G. V., and Muduli, S. ----- (1973). Some International Evidence on Output- (2023). Taming Inflation by Anchoring Inflation Inflation Tradeoffs. The American Economic Review, Expectations. Economic and Political Weekly, 58(22), 63(3), 326–334. 33-41. ----- (1976). Econometric Policy Evaluation: A Critique. Patzelt, P and Reis, R. (2024). Estimating the Rise in Carnegie-Rochester Conference Series on Public Expected Inflation from Higher Energy Prices. CEPR Policy, 1(1), 19-46. Discussion Paper No. 18907. Malmendier, U. and Nagel, S. (2016). Learning Posen, A. (2011). The Soft Tyranny of Inflation from Inflation Experiences. Quarterly Journal of Expectations. International Finance, 14(3), 541-566. Economics, 131(1), 53-87. Reiche, L. and Meyler, A. (2022). Making sense Mankiw, N. G., and Reis, R. (2002). Sticky Information of consumer inflation expectations: the role of versus Sticky Prices: A Proposal to Replace the New uncertainty. European Central Bank Working Paper Keynesian Phillips Curve. The Quarterly Journal of Series No. 2642. Economics. 117(4), 1295-1328. Rudemo, M. (1982). Empirical Choice of Histograms Mankiw, N. G., Reis, R. and Wolfers, J. (2004). and Kernel Density Estimators. Scandinavian Journal Disagreement about Inflation Expectations. NBER of Statistics, 65-78. Macroeconomics Annual, Vol. 18, 209-270. Schafer, J. (2022). Inflation Expectations and Their Manski, C. F. (2004). Measuring expectations. Formation. Congressional Budget Office Working Econometrica, 72(5), 1329-1376. Paper 2022-03. Mehra, Y. P., and Reilly, D. (2008). Inflation Sharma, N. K., and Bicchal, M. (2018). The Properties Expectations: Their Sources and Effects. Richmond Fed Economic Brief. October, No. 08-01. of Inflation Expectations: Evidence for India. Economia, 19(1), 74-89. Mishkin, F. S. (2007). Inflation Dynamics, International Finance, 10(3), 317-334. Shaw, P. (2023). Reading Consumers’ Minds: An Analysis of Inflation Expectations. Reserve Bank of Moessner, R. (2021). Determinants of Inflation India Working Paper. 05. Expectations. CESifo Working Paper Series 9485. Shaw, P., Jayaraman, A. R. and Das, T. B. (2019). Muth, J. F. (1961). Rational Expectations and the Theory of Price Movements. Econometrica, 29(3), Households’ Inflation Expectations: A Reflection. 315–335. RBI Bulletin, December, 59-69. Patra, M. D., and Ray, P. (2010). Inflation Expectations Sheffrin, S. M. (1996). Rational Expectations. and Monetary Policy in India: An empirical Cambridge University Press. https://doi.org/10.1017/ exploration. International Monetary Fund WP/10/84. CBO9781139174367. 102 RBI Bulletin July 2025Household Inflation Expectations in India: Emerging Trends, ARTICLE Determinants and Impact of Monetary Policy Sims, C. A. (2003). Implications of Rational Weber, M., D’Acunto, F., Gorodnichenko, Y. and Inattention. Journal of Monetary Economics, 50(3), Coibion, O. (2022). The Subjective Inflation 665-690. Expectations of Households and Firms: Measurement, Determinants, and Implications. Journal of Economic Stroebel, J. and Vavra, J. (2019). House Prices, Local Perspectives, 36 (3), 157–84. Demand, and Retail Prices. Journal of Political Economy, 127(3), 1391–1436. Woodford, M. (2003). Inflation Targeting and Optimal Monetary Policy. Annual Economic Policy Taylor, J. B. (1979). Estimation and Control of a Conference, Princeton University. October 16-17. Macroeconomic Model with Rational Expectations. Econometrica, 47(5), 1267–1286. RBI Bulletin July 2025 103ARTICLE Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy Annexure A: Adjustment Details The number of respondents in the unit-level IESH data after adjusting for extreme values is presented in Chart A1. Chart A1: Comparison of Count for Inflation Expectations (1-year ahead) (Number) 7000 6000 5000 4000 3000 2000 1000 0 Reported Trimmed Exclusion Sources: IESH and Authors’ calculations. Annexure B: Summary Statistics Unit level observations can have a maximum value of 16.5 per cent in reported series. On the other hand, the maximum of unit-level observations in trimmed series can take values higher than 16.5 as well. However, at the aggregate level, the median of the unit-level values of adjusted series (exclusion and trimmed) is found to be lower than that of reported series (Table B1). Table B1: Summary Statistics (Period: 2009-10: Q2 to 2024-25: Q4) S. No. Variables (in per cent) No. of Obs Mean Median Min Max Standard Deviations 1. Inflation Expectations (1-year ahead) (i) Reported 63 10.96 10.30 5.50 16.50 2.17 (ii) Exclusion 63 9.75 9.50 6.50 12.50 1.36 (iii) Trimmed 63 10.04 9.50 5.50 14.50 1.75 2. Output Gap 63 0.03 0.18 -22.55 4.29 3.66 3. WACR 63 6.18 6.42 3.11 9.27 1.67 4. CPI Headline Inflation 63 6.52 5.83 2.20 15.32 2.74 5. Rainfall Deviation 63 8.98 6.85 -92.73 214.31 58.81 6. RPV Food (in standard deviation) 53 48.88 45.52 21.18 116.13 19.04 7. Brent Crude Oil Price Inflation 63 7.25 0.55 -56.98 132.27 36.44 8. LPG 19kg Price Inflation 63 6.41 6.64 -36.35 57.11 20.81 9. Real Personal Loan Growth 63 9.00 9.73 -12.15 22.18 6.91 10. Spread (WALR-WACR) 49 3.66 3.64 2.66 4.98 0.65 Source: Authors’ calculations. 104 RBI Bulletin July 2025 90-peS 01-raM 01-peS 11-raM 11-peS 21-raM 21-peS 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raMHousehold Inflation Expectations in India: Emerging Trends, ARTICLE Determinants and Impact of Monetary Policy Annexure C: Robustness Results Results with supply shocks: To the benchmark models, when we add supply shocks, primarily rainfall, food volatility and oil price inflation, the results continue to hold (Table C1). The effect of past realised inflation and monetary policy actions is stronger and significant once we adjust for extreme values. The adoption of FIT regime has successfully brought down the inflation expectations. Food price volatility, combined with rainfall puts an upward pressure on these expectations, albeit with a small magnitude. Oil price inflation, both in terms of LPG 19 kg cylinder and Brent crude oil, has a positive significant impact on adjusted inflation expectations. Table C1: Models with supply shocks Dependent variable: 1-year ahead expectation ( ) Sample period: 2009-10: Q2 – 2024-25: Q4 Independent variables: Reported Exclusion Trimmed (1) (2) (3) (4) (5) (6) (7) (8) (9) 5.269*** 4.708*** 2.716* 4.372** 5.931*** 4.853*** 7.304*** 6.770*** 5.300*** (1.792) (0.984) (1.355) (1.634) (0.661) (0.453) (1.257) (1.235) (0.704) 0.619*** 0.706*** 0.675*** 0.424** 0.409*** 0.369*** 0.214** 0.209* 0.275*** (0.206) (0.096) (0.182) (0.175) (0.063) (0.048) (0.104) (0.076) (0.053) 0.044 0.003 0.174 0.114*** 0.140** 0.162*** 0.276*** 0.295*** 0.261*** (0.287) (0.140) (0.289) (0.110) (0.047) (0.053) (0.048) (0.067) (0.045) -0.123 -0.135 -0.178 -0.146*** -0.200*** -0.119*** -0.135*** -0.197*** -0.150*** (0.121) (0.080) (0.158) (0.051) (.031) (0.038) (0.033) (0.049) (0.019) 0.039 0.046* 0.113** 0.107** 0.058*** 0.079*** 0.055*** 0.037** 0.058*** (0.055) (0.036) (0.043) (0.042) (0.009) (0.010) (0.014) (0.017) (0.014) -1.363* -1.428*** -0.455 -0.566** -0.638*** -0.365*** -1.470*** -1.028*** -1.283*** (0.478) (0.511) (0.653) (0.432) (0.218) (0.190) (0.415) (0.476) (0.291) 0.001 0.014* 0.007* 0.008* 0.002 0.007*** 0.005 0.001 0.010*** (0.001) (0.006) (0.006) (0.005) (0.001) (0.001) (0.003) (0.001) (0.003) 0.010 0.006 0.003 0.003* 0.004* 0.004 0.016* 0.003 0.005 (0.008) (0.004) (0.007) (0.006) (0.001) (0.003) (0.002) (0.002) (0.004) 0.001** 0.001* 0.001 0.001** 0.001** 0.004*** 0.001*** 0.001*** 0.0001*** (0.001) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) 0.005** 0.003** 0.008** (0.004) (0.002) (0.003) 0.004* 0.003*** 0.001* (0.003) (0.001) (0.001) Adjusted-R2 0.604 0.631 0.606 0.520 0.593 0.520 0.671 0.665 0.660 J-statistic 6.710 7.694 5.114 8.650 11.402 10.178 9.048 10.976 8.805 Prob (J-statistic) 0.752 0.809 0.883 0.800 0.935 0.896 0.828 0.963 0.946 DW-statistic 2.395 2.697 2.475 2.199 2.32 2.330 2.598 2.620 2.721 Long-run impact 13.829 16.014 8.357 7.590 10.036 7.691 9.293 8.559 13.829 0.115 0.010 0.535 0.198 0.237 0.257 0.351 0.373 0.115 -0.323 -0.459 -0.548 -0.253 -0.338 -0.189 -0.172 -0.249 -0.323 Notes: 1. Instrumental variables used include instruments for: (1 to 2 lags); , and RPVFood (1 to 4 lags); (1 to 5 t lags); (1 to 3 lags); (1 to 2 lags). –1 2. Figures in parentheses indicate standard errors. 3. *, **, *** denote significance levels at 10, 5 and 1 per cent, respectively. RBI Bulletin July 2025 105ARTICLE Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy Results with REER: Comparing the effect of REER on various agents’ expectations, we see that REER is significant in case of professional (SPF) and businesses’ (BIES) forecasts (Table C2). Table C2: Models with Professional Forecasts and REER Dependent variable: 1-year ahead median inflation expectations ( ) Sample period: 2017-18: Q3 – 2024-25: Q4 Inflation expectations from: SPF BIES IESH Reported Trimmed Independent variables: (1) (2) (3) (4) 2.457*** 2.395*** 5.144*** 7.415*** (0.283) (0.386) (0.540) (0.468) 0.607*** 0.716*** 0.373*** 0.166*** (0.030) (0.071) (0.045) (0.051) 0.130*** 0.207*** 0.205*** 0.233*** (0.043) (0.040) (0.055) (0.038) -0.063** -0.120** -0.090*** -0.231*** (0.023) (0.042) (0.028) (0.019) 0.037*** 0.014* 0.025** 0.027*** (0.002) (0.007) (0.028) (0.008) REER 0.029** 0.040** 0.028 -0.019 t (0.015) (0.014) (0.019) (0.013) Adjusted-R2 0.580 0.503 0.490 0.833 J-statistic 7.382 7.465 7.221 7.791 Prob (J-statistic) 0.946 0.825 0.926 0.900 DW-statistic 2.539 2.181 2.567 1.921 Long-run impact 6.252 8.433 8.204 8.891 0.331 0.729 0.327 0.279 -0.160 -0.423 -0.144 -0.277 Notes: 1. SPF denotes 3-quarters ahead inflation expectations; BIES, Reported and Trimmed denotes 1-year ahead Inflation expectations. Reported refers to published series of IESH inflation expectations, while trimmed is the aggregated series of unit-level observations from IESH calculated after trimming (as explained in Section III). 2. Instrumental variables used include instruments for: (1 to 2 lags); , and REER t(1 to 4 lags); (1 to 5 lags). 3. Figures in parentheses indicate standard errors. 4. *, **, *** denote significance levels at 10, 5 and 1 per cent, respectively. 106 RBI Bulletin July 2025CURRENT STATISTICS Select Economic Indicators Reserve Bank of India Money and Banking Prices and Production Government Accounts and Treasury Bills Financial Markets External Sector Payment and Settlement Systems Occasional SeriesCURRENT STATISTICS Contents No. Title Page 1 Select Economic Indicators 109 Reserve Bank of India 2 RBI – Liabilities and Assets 110 3 Liquidity Operations by RBI 111 4 Sale/ Purchase of U.S. Dollar by the RBI 112 4A Maturity Breakdown (by Residual Maturity) of Outstanding Forwards of RBI (US$ Million) 113 5 RBI's Standing Facilities 113 Money and Banking 6 Money Stock Measures 114 7 Sources of Money Stock (M) 115 3 8 Monetary Survey 116 9 Liquidity Aggregates 117 10 Reserve Bank of India Survey 118 11 Reserve Money – Components and Sources 118 12 Commercial Bank Survey 119 13 Scheduled Commercial Banks' Investments 119 14 Business in India – All Scheduled Banks and All Scheduled Commercial Banks 120 15 Deployment of Gross Bank Credit by Major Sectors 121 16 Industry-wise Deployment of Gross Bank Credit 122 17 State Co-operative Banks Maintaining Accounts with the Reserve Bank of India 123 Prices and Production 18 Consumer Price Index (Base: 2012=100) 124 19 Other Consumer Price Indices 124 20 Monthly Average Price of Gold and Silver in Mumbai 124 21 Wholesale Price Index 125 22 Index of Industrial Production (Base: 2011-12=100) 129 Government Accounts and Treasury Bills 23 Union Government Accounts at a Glance 129 24 Treasury Bills – Ownership Pattern 130 25 Auctions of Treasury Bills 130 Financial Markets 26 Daily Call Money Rates 131 27 Certificates of Deposit 132 28 Commercial Paper 132 29 Average Daily Turnover in Select Financial Markets 132 30 New Capital Issues by Non-Government Public Limited Companies 133 RBI Bulletin July 2025 107CURRENT STATISTICS No. Title Page External Sector 31 Foreign Trade 134 32 Foreign Exchange Reserves 134 33 Non-Resident Deposits 134 34 Foreign Investment Inflows 135 35 Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals 135 36 Indices of Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) of the Indian Rupee 136 37 External Commercial Borrowings (ECBs) – Registrations 137 38 India’s Overall Balance of Payments (US $ Million) 138 39 India's Overall Balance of Payments (` Crore) 139 40 Standard Presentation of BoP in India as per BPM6 (US $ Million) 140 41 Standard Presentation of BoP in India as per BPM6 (` Crore) 141 42 India’s International Investment Position 142 Payment and Settlement Systems 43 Payment System Indicators 143 Occasional Series 44 Small Savings 145 45 Ownership Pattern of Central and State Governments Securities 146 46 Combined Receipts and Disbursements of the Central and State Governments 147 47 Financial Accommodation Availed by State Governments under various Facilities 148 48 Investments by State Governments 149 49 Market Borrowings of State Governments 150 50 (a) Flow of Financial Assets and Liabilities of Households - Instrument-wise 151 50 (b) Stocks of Financial Assets and Liabilities of Households- Select Indicators 154 Notes: .. = Not available. – = Nil/Negligible. P = Preliminary/Provisional. PR = Partially Revised. 108 RBI Bulletin July 2025CURRENT STATISTICS No. 1: Select Economic Indicators 2023-24 2024-25 Item 2024-25 Q3 Q4 Q3 Q4 1 2 3 4 5 1 Real Sector (% Change) 1.1 GVA at Basic Prices 6.4 8.0 7.3 6.5 6.8 1.1.1 Agriculture 4.6 1.5 0.9 6.6 5.4 1.1.2 Industry 4.5 12.6 9.9 3.5 4.7 1.1.3 Services 7.5 8.5 8.0 7.5 7.9 1.1a Final Consumption Expenditure 6.5 5.3 6.3 8.3 4.7 1.1b Gross Fixed Capital Formation 7. 1 9. 3 6 . 0 5 . 2 9 . 4 2024 2025 2024-25 Apr. May Apr. May 1 2 3 4 5 1.2 Index of Industrial Production 4.0 5.2 6.3 2.6 1.2 2 Money and Banking (% Change) 2.1 Scheduled Commercial Banks 2.1.1 Deposits 10.6 12.0 12.2 10.1 10.1 (10.3) (12.6) (12.7) (9.8) (9.9) 2.1.2 Credit # 12.1 15.5 16.1 11.1 9.9 (11.0) (19.2) (19.8) (10.1) (9.0) 2.1.2.1 Non-food Credit # 12.0 15.5 16.2 11.0 9.8 (11.0 ) (19.2 ) (19.8 ) (10. 0 ) (8. 8 ) 2.1.3 Investment in Govt. Securities 10.6 10.7 8.8 9.8 9.2 (9.7) (12.3) (10.3) (9.0) (8.5) 2.2 Money Stock Measures 2.2.1 Reserve Money (M0) 4.3 5.8 5.8 3.7 6.1 2.2.2 Broad Money (M3) 9. 6 10. 9 12 . 1 9 . 6 9 . 5 (9.4) (11.4) (12.5) (9.4) (9.3) 3 Ratios (%) 3.1 Cash Reserve Ratio 4.00 4.50 4.50 4.00 4.00 3.2 Statutory Liquidity Ratio 18.00 18.00 18.00 18.00 18.00 3.3 Cash-Deposit Ratio 4.3 5.4 5.0 4.5 4.5 (4.3) (5.3) (4.9) (4.5) (4.5) 3.4 Credit-Deposit Ratio 79.1 77.4 77.5 78.1 77.4 (80.8) (79.5) (79.6) (79.7) (78.9) 3.5 Incremental Credit-Deposit Ratio # 89.2 37.4 59.2 -8.4 11.0 (86.1) (34.4) (57.3) (-11.2) (7.3) 3.6 Investment-Deposit Ratio 29.5 29.2 29.0 29.1 28.8 (29.7) (29.5) (29.3) (29.3) (28.9) 3.7 Incremental Investment-Deposit Ratio 29.5 8.1 13.4 -5.4 1.7 (28.1) (6.9) (12.6) (-5.8) (1.5) 4 Interest Rates (%) 4.1 Policy Repo Rate 6.2 5 6.5 0 6.5 0 6.0 0 6.0 0 4.2 Fixed Reverse Repo Rate 3.35 3.35 3.35 3.35 3.35 4.3 Standing Deposit Facility (SDF) Rate * 6.00 6.25 6.25 5.75 5.75 4.4 Marginal Standing Facility (MSF) Rate 6.50 6.75 6.75 6.25 6.25 4.5 Bank Rate 6.50 6.75 6.75 6.25 6.25 4.6 Base Rate 9.10/10.40 9.10/10.25 9.10/10.25 9.10/10.40 9.10/10.40 4.7 MCLR (Overnight) 8.15/8.45 8.00/8.60 8.00/8.60 8.15/8.45 8.15/8.25 4.8 Term Deposit Rate >1 Year 6.00/7.25 6.00/7.25 6.00/7.25 6.00/7.15 6.00/6.85 4.9 Savings Deposit Rate 2.70/3.00 2.70/3.00 2.70/3.00 2.70/2.75 2.70/2.75 4.10 Call Money Rate (Weighted Average) 6.35 6.65 6.56 5.86 5.80 4.11 91-Day Treasury Bill (Primary) Yield 6.52 6.92 6.85 5.90 5.62 4.12 182-Day Treasury Bill (Primary) Yield 6.52 7.04 7.01 5.93 5.63 4.13 364-Day Treasury Bill (Primary) Yield 6.47 7.07 7.04 5.91 5.63 4.14 10-Year G-Sec Par Yield (FBIL) 6.62 7.16 7.01 6.40 6.23 5 Reference Rate and Forward Premia 5.1 INR-US$ Spot Rate (Rs. Per Foreign Currency) 85.58 83.34 83.30 85.58 85.48 5.2 INR-Euro Spot Rate (Rs. Per Foreign Currency) 92.32 89.43 90.12 97.12 96.94 5.3 Forward Premia of US$ 1-month (%) 3.12 1.16 1.08 2.57 2.01 3-month (%) 2.56 1.26 1.22 2.34 1.87 6-month (%) 2.2 8 1.3 7 1.3 4 2.1 5 1.8 3 6 Inflation (%) 6.1 All India Consumer Price Index 4.6 4.8 4.8 3.2 2.8 6.2 Consumer Price Index for Industrial Workers 3.39 3.9 3.9 2.9 2.9 6.3 Wholesale Price Index 2.3 1.2 2.7 0.9 0.4 6.3.1 Primary Articles 5.2 5.2 7.4 -0.9 -2.0 6.3.2 Fuel and Power -1.3 -0.9 1.0 -3.8 -2.3 6.3.3 Manufactured Products 1. 7 -0. 1 1 . 0 2 . 6 2 . 0 7 Foreign Trade (% Change) 7.1 Imports 6.2 11.1 7.3 19.1 -1.7 7.2 Exports 0.1 2.0 13.3 8.6 -2.3 Note : Financial Benchmark India Pvt. Ltd. (FBIL) has commenced publication of the G-Sec benchmarks with effect from March 31, 2018 as per RBI circularFMRD.DIRD. 7/14.03.025/2017-18 dated March 31, 2018. FBIL has started dissemination of reference rates w.e.f. July 10, 2018. #: Bank credit growth and related ratios for all fortnights from December 3, 2021 to November 18, 2022 are adjusted for past reporting errors by select scheduled commercial banks (SCBs). Figures in parentheses include the impact of merger of a non-bank with a bank. *: As per Press Release No. 2022-2023/41 dated April 08, 2022. RBI Bulletin July 2025 109CURRENT STATISTICS Reserve Bank of India No. 2: RBI - Liabilities and Assets * (₹ Crore) Item As on the Last Friday/ Friday 2024-25 2024 2025 Jun. May 30 Jun. 06 Jun. 13 Jun. 20 Jun. 27 1 2 3 4 5 6 7 1 Issue Department 1.1 Liabilities 1.1.1 Notes in Circulation 3683836 3528937 3798507 3814334 3810070 3792588 3783575 1.1.2 Notes held in Banking Department 11 11 13 10 13 17 18 1.1/1.2 Total Liabilities (Total Notes Issued) or Assets 3683847 3528948 3798520 3814344 3810083 3792605 3783593 1.2 Assets 1.2.1 Gold 235379 172686 255367 260475 263095 262847 255940 1.2.2 Foreign Securities 3448129 3356024 3542856 3553670 3546664 3529511 3527205 1.2.3 Rupee Coin 340 237 297 199 324 247 448 1.2.4 Government of India Rupee Securities - - - - - - - 2 Banking Department 2.1 Liabilities 2.1.1 Deposits 1709285 1729450 1824626 1792356 1777073 1785257 1803255 2.1.1.1 Central Government 100 101 101 100 101 100 100 2.1.1.2 Market Stabilisation Scheme - - - - - - 2.1.1.3 State Governments 42 42 42 42 42 42 42 2.1.1.4 Scheduled Commercial Banks 943060 973455 956086 937882 932453 939700 933483 2.1.1.5 Scheduled State Co-operative Banks 7776 8453 8301 8190 8278 8115 8300 2.1.1.6 Non-Scheduled State Co-operative Banks 5963 5259 5002 5074 5091 5114 4984 2.1.1.7 Other Banks 46963 49202 47182 47493 47535 46892 47375 2.1.1.8 Others 593085 564106 704649 705135 688895 696893 715693 2.1.1.9 Financial Institution Outside India 112296 128832 103263 88440 94677 88401 93278 2.1.2 Other Liabilities 2150508 1635592 2112709 2163245 2195845 2223593 2183725 2.1/2.2 Total Liabilities or Assets 3859793 3365042 3937335 3955600 3972918 4008850 3986980 2.2 Assets 2.2.1 Notes and Coins 11 11 13 11 13 17 18 2.2.2 Balances Held Abroad 1413591 1459215 1489277 1513678 1561320 1604588 1590460 2.2.3 Loans and Advances 2.2.3.1 Central Government - - - - - - - 2.2.3.2 State Governments 26284 7286 27482 30444 15962 17089 20066 2.2.3.3 Scheduled Commercial Banks 251984 102741 6516 3377 2248 2659 1065 2.2.3.4 Scheduled State Co-op.Banks - - - - - - - 2.2.3.5 Industrial Dev. Bank of India - - - - - - - 2.2.3.6 NABARD - - - - - - - 2.2.3.7 EXIM Bank - - - - - - - 2.2.3.8 Others 36426 9061 12340 10492 8492 7053 7031 2.2.3.9 Financial Institution Outside India 111768 129258 103071 88442 95234 88936 93636 2.2.4 Bills Purchased and Discounted 2.2.4.1 Internal - - - - - - - 2.2.4.2 Government Treasury Bills - - - - - - - 2.2.5 Investments 1560630 1349978 1813740 1814109 1790025 1789104 1787779 2.2.6 Other Assets 459101 307492 484895 495048 499624 499405 486926 2.2.6.1 Gold 429510 298664 465984 475305 480086 479635 466434 * Data are provisional. 110 RBI Bulletin July 2025CURRENT STATISTICS No. 3: Liquidity Operations by RBI (₹ Crore) Date Standing OMO (Outright) Net Injection (+)/ Liquidity Absorption (-) Liquidity Adjustment Facility Facilities (1+3+5+7+9-2-4-6 -8) Sale Purchase Variable Variable Reverse Rate Repo Rate MSF SDF Repo Reverse Repo Repo 1 2 3 4 5 6 7 8 9 10 May 1, 2025 - - - - 14589 181779 - - - -167190 May 2, 2025 - - 6380 - 568 200035 - - - -193087 May 3, 2025 - - - - 474 171056 - - - -170582 May 4, 2025 - - - - 29 162216 - - - -162187 May 5, 2025 - - 5646 - 395 162616 - - - -156575 May 6, 2025 - - 6428 - 161 178561 -770 - - -172742 May 7, 2025 - - 5192 - 493 182611 - - 50000 -126926 May 8, 2025 - - 8074 - 1980 177191 - - - -167137 May 9, 2025 - - 7417 - 552 213300 - - - -205331 May 10, 2025 - - - - 2404 207660 - - - -205256 May 11, 2025 - - - - 2543 207489 - - - -204946 May 12, 2025 - - - - 2281 205550 - - - -203269 May 13, 2025 - - 5401 - 154 194470 - - 25000 -163915 May 14, 2025 - - 5341 - 175 222868 -991 - - -218343 May 15, 2025 - - 5198 - 358 262952 866 - - -256530 May 16, 2025 - - 5293 - 340 289909 151 - 25000 -259125 May 17, 2025 - - - - 513 231345 - - - -230832 May 18, 2025 - - - - 396 175950 - - - -175554 May 19, 2025 - - 5170 - 456 234140 - - - -228514 May 20, 2025 - - 4617 - 435 224630 - - 19203 -200375 May 21, 2025 - - 4348 - 591 171096 - - - -166157 May 22, 2025 - - 4341 - 616 138547 - - - -133590 May 23, 2025 - - 4371 - 676 209752 - - - -204705 May 24, 2025 - - - - 601 181823 - - - -181222 May 25, 2025 - - - - 879 149634 - - - -148755 May 26, 2025 - - 4073 - 2476 210831 - - - -204282 May 27, 2025 - - 3542 - 902 227421 - - - -222977 May 28, 2025 - - 3843 - 606 229136 -1113 - - -225800 May 29, 2025 - - 3335 - 1062 218709 972 - - -213340 May 30, 2025 - - 8721 - 1540 229098 - - - -218837 May 31, 2025 - - - - 1005 246776 - - - -245771 RBI Bulletin July 2025 111CURRENT STATISTICS No. 4: Sale/ Purchase of U.S. Dollar by the RBI i) Operations in onshore / offshore OTC segment Item 2024 2025 2024-25 May Apr. May 1 2 3 4 1 Net Purchase/ Sale of Foreign Currency (US $ Million) (1.1-1.2) -34511 4222 -1660 1764 1.1 Purchase (+) 364200 23647 10110 9124 1.2 Sale (–) 398711 19425 11770 7360 2 ₹ equivalent at contract rate (₹ Crores) -291233 35160 -14635 14562 3 Cumulative (over end-March) (US $ Million) -34511 575 -1660 104 (₹ Crore) -291233 4672 -14635 -73 4 Outstanding Net Forward Sales (-)/ Purchase (+) at the end of month (US -84345 -10360 -72575 -65215 $ Million) ii) Operations in currency futures segment Item 2024 2025 2024-25 May Apr. May 1 2 3 4 1 Net Purchase/ Sale of Foreign Currency (US $ Million) (1.1-1.2) 0 0 0 0 1.1 Purchase (+) 31415 2287 0 0 1.2 Sale (–) 31415 2287 0 0 2 Outstanding Net Currency Futures Sales (-)/ Purchase (+) at the end of 0 -1812 0 0 month (US $ Million) 112 RBI Bulletin July 2025CURRENT STATISTICS No. 4 A : Maturity Breakdown (by Residual Maturity) of Outstanding Forwards of RBI (US $ Million) Item As on May 31 , 2025 Long (+) Short (-) Net (1-2) 1 2 3 1. Upto 1 month 0 4825 -4825 2. More than 1 month and upto 3 months 0 10235 -10235 3. More than 3 months and upto 1 year 0 30055 -30055 4. More than 1 year 0 20100 -20100 Total (1+2+3+4) 0 65215 -65215 No. 5: RBI’s Standing Facilities (₹ Crore) Item As on the Last Reporting Friday 2024-25 2024 2025 Jun. 28 Jan. 24 Feb. 21 Mar. 21 Apr. 18 May 30 Jun. 27 1 2 3 4 5 6 7 8 1 MSF 9961 46848 3232 500 9961 2003 1540 1065 2 Export Credit Refinance for Scheduled Banks 2.1 Limit - - - - - - - - 2.2 Outstanding - - - - - - - - 3 Liquidity Facility for PDs 3.1 Limit 9900 9900 9900 9900 9900 14900 14900 14900 3.2 Outstanding 9517 9061 9556 9096 9517 7999 8595 7010 4 Others 4.1 Limit 76000 76000 76000 76000 76000 76000 76000 76000 4.2 Outstanding - - - - - - - - 5 Total Outstanding (1+2.2+3.2+4.2) 19478 55909 12788 9596 19478 10002 10135 8075 RBI Bulletin July 2025 113CURRENT STATISTICS Money and Banking No. 6: Money Stock Measures (₹ Crore) Item Outstanding as on March 31/last reporting Fridays of the month/ reporting Fridays 2024-25 2024 2025 May 31 May 02 May 16 May 30 1 2 3 4 5 1 Currency with the Public (1.1 + 1.2 + 1.3 – 1.4) 3630751 3468799 3713241 3744459 3736527 1.1 Notes in Circulation 3686799 3537190 3773204 3804541 3797410 1.2 Circulation of Rupee Coin 35889 33115 36179 36179 36179 1.3 Circulation of Small Coins 743 743 743 743 743 1.4 Cash on Hand with Banks 93696 102572 97941 98072 98902 2 Deposit Money of the Public 2953329 2742637 3168178 3090359 3241663 2.1 Demand Deposits with Banks 2840023 2651468 3061827 2984812 3131530 2.2 'Other' Deposits with Reserve Bank 113307 91169 106352 105547 110133 3 M1 (1 + 2) 6584081 6211436 6881420 6834817 6978190 4 Post Office Saving Bank Deposits 212331 196778 212331 212331 212331 5 M2 (3 + 4) 6796412 6408214 7093751 7047148 7190521 6 Time Deposits with Banks 20643062 19303478 20885898 20815351 20956339 (20702508) (19398657) (20943231) (20871567) (21011378) 7 M3 (3 + 6) 27227143 25514915 27767318 27650168 27934529 (27286589) (25610093) (27824651) (27706384) (27989568) 8 Total Post Office Deposits 1443555 1337638 1443555 1443555 1443555 9 M4 (7 + 8) 28670698 26852553 29210873 29093723 29378084 (28730144) (26947731) (29268206) (29149939) (29433123) Figures in parentheses include the impact of merger of a non-bank with a bank. 114 RBI Bulletin July 2025CURRENT STATISTICS No. 7 : Sources of Money Stock (M) 3 (₹ Crore) Sources Outstanding as on March 31/last reporting Fridays of the month/reporting Fridays 2024-25 2024 2025 May 31 May 02 May 16 May 30 1 2 3 4 5 1 Net Bank Credit to Government 8463065 7370024 8626146 8690546 8446563 1 Net Bank Credit to Government (Including Merger) (8510825) (7454906) (8672729) (8737129) (8493151) 1.1 RBI’s net credit to Government (1.1.1–1.1.2) 1508105 966036 1652602 1746157 1479315 1.1.1 Claims on Government 1591591 1374629 1741551 1851653 1839456 1.1.1.1 Central Government 1558903 1363906 1703071 1815249 1811974 1.1.1.2 State Governments 32688 10723 38480 36404 27482 1.1.2 Government deposits with RBI 83485 408593 88949 105496 360141 1.1.2.1 Central Government 83443 408551 88906 105453 360099 1.1.2.2 State Governments 42 42 42 42 42 1.2 Other Banks’ Credit to Government 6954959 6403988 6973543 6944389 6967248 1.2 Other Banks Credit to Government (Including Merger) (7002720) (6488870) (7020127) (6990972) (7013836) 2 Bank Credit to Commercial Sector 18646762 17036241 18683378 18628149 18690046 2 Bank Credit to Commercial Sector (Including Merger) (19068129) (17547319) (19093866) (19034855) (19089019) 2.1 RBI’s credit to commercial sector 38246 11372 20762 19079 14393 2.2 Other banks’ credit to commercial sector 18608516 17024869 18662616 18609069 18675653 2.2 Other banks credit to commercial sector (Including Merger) (19029883) (17535948) (19073105) (19015776) (19074626) 2.2.1 Bank credit by commercial banks 17822605 16271803 17874468 17821005 17888404 2.2.1 Bank credit by commercial banks (Including Merger) (18243972) (16782882) (18284957) (18227712) (18287377) 2.2.2 Bank credit by co-operative banks 766659 734587 769110 768912 768000 2.2.3 Investments by commercial and co-operative banks in other securities 19252 18479 19038 19152 19249 2.2.3 Investments by commercial and co-operative banks in other securities (Including Merger) (19252) (18479) (19038) (19152) (19249) 3 Net Foreign Exchange Assets of Banking Sector (3.1 + 3.2) 6027804 5615739 6112152 6178440 6230153 3.1 RBIs net foreign exchange assets (3.1.1 - 3.1.2) 5550947 5289318 5635295 5701583 5753296 3.1.1 Gross foreign assets 5550956 5289319 5635303 5701581 5753292 3.1.2 Foreign liabilities 9 0 9 -3 -4 3.2 Other banks’ net foreign exchange assets 476857 326421 476857 476857 476857 4 Government’s Currency Liabilities to the Public 36632 33858 36922 36922 36922 5 Banking Sector’s Net Non-monetary Liabilities 5947120 4540947 5691280 5883889 5469155 5 Banking Sectors Net Non-monetary Liabilities (Including Merger) (6356801) (5041729) (6091019) (6280963) (5859677) 5.1 Net non-monetary liabilities of RBI 2147427 1610515 2257212 2300152 2099222 5.2 Net non-monetary liabilities of other banks (residual) 3799694 2930431 3434068 3583737 3369933 5.2 Net non-monetary liabilities of other banks (residual) (Including Merger) (4209375) (3431213) (3833807) (3980811) (3760454) M₃(1+2+3+4–5) 27227143 25514915 27767318 27650168 27934529 M3 (1+2+3+4-5) (Including Merger) (27286589) (25610093) (27824651) (27706384) (27989568) Figures in parentheses include the impact of merger of a non-bank with bank. RBI Bulletin July 2025 115CURRENT STATISTICS No. 8: Monetary Survey (₹ Crore) Item Outstanding as on March 31/last reporting Fridays of the month/reporting Fridays 2024-25 2024 2025 May 31 May 02 May 16 May 30 1 2 3 4 5 Monetary Aggregates NM₁ (1.1+1.2.1+1.3) 6584081 6211436 6881420 6834817 6978559 NM₂ (NM₁ + 1.2.2.1) 15741937 14793220 16152186 16070915 16278082 NM2 (NM1 + 1.2.2.1) (Including Merger) (15768688) (14836051) (16177985) (16096212) (16302849) NM₃ (NM₂ +1.2.2.2 + 1.4 = 2.1 + 2.2 + 2.3 – 2.4 – 2.5) 27850121 26020993 28351801 28253207 28539892 NM3 (NM2 + 1.2.2.2 + 1.4 = 2.1 + 2.2 + 2.3 - 2.4 - 2.5) (Including Merger) (27909568) (26116172) (28409133) (28309423) (28594932) 1 Components 1.1 Currency with the Public 3630751 3468799 3713241 3744459 3736896 1.2 Aggregate Deposits of Residents 23190815 21722100 23663529 23509473 23797136 1.2 Aggregate Deposits of Residents (Including Merger) (23250261) (21817278) (23720862) (23565689) (23852176) 1.2.1 Demand Deposits 2840023 2651468 3061827 2984812 3131530 1.2.2 Time Deposits of Residents 20350792 19070631 20601702 20524662 20665606 1.2.2 Time Deposits of Residents (Including Merger) (20410239) (19165810) (20659035) (20580878) (20720646) 1.2.2.1 Short-term Time Deposits 9157856 8581784 9270766 9236098 9299523 1.2.2.1 Short-term Time Deposits (Including Merger) (9184607) (8624615) (9296566) (9261395) (9324291) 1.2.2.1.1 Certificates of Deposits (CDs) 527375 364274 513793 504085 516544 1.2.2.2 Long-term Time Deposits 11192936 10488847 11330936 11288564 11366083 1.2.2.2 Long-term Time Deposits (Including Merger) (11225631) (10541196) (11362469) (11319483) (11396355) 1.3 'Other' Deposits with RBI 113307 91169 106352 105547 110133 1.4 Call/Term Funding from Financial Institutions 915248 738925 868679 893728 895727 2 Sources 2.1 Domestic Credit 28333316 25527033 28591744 28593316 28414468 2.1 Domestic Credit (Including Merger) (28802443) (26122994) (29048816) (29046606) (28860029) 2.1.1 Net Bank Credit to the Government 8463065 7370024 8626146 8690546 8446563 2.1.1 Net Bank Credit to the Government (Including Merger) (8510825) (7454906) (8672729) (8737129) (8493151) 2.1.1.1 Net RBI credit to the Government 1508105 966036 1652602 1746157 1479315 2.1.1.2 Credit to the Government by the Banking System 6954959 6403988 6973543 6944389 6967248 2.1.1.2 Credit to the Government by the Banking System (Including Merger) (7002720) (6488870) (7020127) (6990972) (7013836) 2.1.2 Bank Credit to the Commercial Sector 19870251 18157010 19965598 19902770 19967905 2.1.2 Bank Credit to the Commercial Sector (Including Merger) (20291618) (18668088) (20376087) (20309477) (20366878) 2.1.2.1 RBI Credit to the Commercial Sector 38246 11372 20762 19079 14393 2.1.2.2 Credit to the Commercial Sector by the Banking System 19832006 18145638 19944837 19883691 19953512 2.1.2.2 Credit to the Commercial Sector by the Banking System (Including Merger) (20253372) (18656717) (20355325) (20290397) (20352485) 2.1.2.2.1 Other Investments ( Non-SLR Securities) 1208294 1101545 1256123 1258743 1259726 2.2 Government's Currency Liabilities to the Public 36632 33858 36922 36922 37291 2.3 Net Foreign Exchange Assets of the Banking Sector 5605462 5158212 5721080 5740174 5821083 2.3.1 Net Foreign Exchange Assets of the RBI 5550947 5289318 5635295 5701583 5753296 2.3.2 Net Foreign Currency Assets of the Banking System 54514 -131107 85785 38590 67787 2.4 Capital Account 4481192 4268718 4728655 4847118 4956419 2.5 Other items (net) 2053777 930174 1669030 1667160 1167053 Figures in parentheses include the impact of merger of a non-bank with a bank. 116 RBI Bulletin July 2025CURRENT STATISTICS No. 9: Liquidity Aggregates (₹ Crore) Aggregates 2024-25 2024 2025 May Mar. Apr. May 1 2 3 4 5 1 NM₃ 27837333 26020993 27837333 28152487 28539892 (27896780) (26116172) (27896780) (28211019) (28594932) 2 Postal Deposits 756786 707232 756786 756786 756786 3 L₁ ( 1 + 2) 28594119 26728225 28594119 28909273 29296678 (28653566) (26823404) (28653566) (28967805) (29351718) 4 Liabilities of Financial Institutions 95148 72510 95148 102284 116492 4.1 Term Money Borrowings 10 1324 10 4 4 4.2 Certificates of Deposit 80810 58570 80810 87705 101755 4.3 Term Deposits 14328 12616 14328 14575 14733 5 L₂ (3 + 4) 28689268 26800735 28689268 29011557 29413170 (28748714) (26895913) (28748714) (29070089) (29468210) 6 Public Deposits with Non-Banking Financial Companies 121178 .. 121178 .. .. 7 L₃ (5 + 6) 28810446 .. 28810446 .. .. Notes : 1 . Figures in the columns might not add up to the total due to rounding off of numbers. 2. Figures in parentheses include the impact of merger of a non-bank with a bank. RBI Bulletin July 2025 117CURRENT STATISTICS No. 10: Reserve Bank of India Survey (₹ Crore) Item Outstanding as on March 31/last reporting Fridays of the month/reporting Fridays 2024-25 2024 2025 May 31 May 2 May 16 May 30 1 2 3 4 5 1 Components 1.1 Currency in Circulation 3724448 3571371 3811183 3842530 3835798 1.2 Bankers’ Deposits with the RBI 991488 1014134 994260 988687 1016571 1.2.1 Scheduled Commercial Banks 926001 951109 933070 928136 956086 1.3 ‘Other’ Deposits with the RBI 113307 91169 106352 105547 110133 Reserve Money (1.1 + 1.2 + 1.3 = 2.1 + 2.2 + 2.3 – 2.4 – 2.5) 4829243 4676674 4911794 4936765 4962501 2 Sources 2.1 RBI’s Domestic Credit 1389090 964014 1496789 1498411 1271136 2.1.1 Net RBI credit to the Government 1508105 966036 1652602 1746157 1479315 2.1.1.1 Net RBI credit to the Central Government (2.1.1.1.1 + 2.1.1.1.2 + 2.1.1.1.3 + 2.1.1.1.4 – 2.1.1.1.5) 1475460 955355 1614165 1709796 1451876 2.1.1.1.1 Loans and Advances to the Central Government - - - - - 2.1.1.1.2 Investments in Treasury Bills - - - - - 2.1.1.1.3 Investments in dated Government Securities 1558574 1363469 1702840 1814971 1811677 2.1.1.1.3.1 Central Government Securities 1558574 1363469 1702840 1814971 1811677 2.1.1.1.4 Rupee Coins 329 438 231 278 297 2.1.1.1.5 Deposits of the Central Government 83443 408551 88906 105453 360099 2.1.1.2 Net RBI credit to State Governments 32646 10681 38438 36361 27439 2.1.2 RBI’s Claims on Banks -157261 -13394 -176575 -266825 -222572 2.1.2.1 Loans and Advances to Scheduled Commercial Banks -157261 -13394 -176575 -266825 -222572 2.1.3 RBI’s Credit to Commercial Sector 38246 11372 20762 19079 14393 2.1.3.1 Loans and Advances to Primary Dealers 9182 9311 9479 8736 8595 2.1.3.2 Loans and Advances to NABARD - - - - - 2.2 Government’s Currency Liabilities to the Public 36632 33858 36922 36922 37291 2.3 Net Foreign Exchange Assets of the RBI 5550947 5289318 5635295 5701583 5753296 2.3.1 Gold 668162 471621 691478 694701 721351 2.3.2 Foreign Currency Assets 4882794 4817697 4943825 5006880 5031941 2.4 Capital Account 1875114 1767903 1955046 1998793 2091368 2.5 Other Items (net) 272313 -157388 302166 301359 7854 No. 11: Reserve Money - Components and Sources (₹ Crore) Item Outstanding as on March 31/last Fridays of the month/Fridays 2024-25 2024 2025 May 31 May 2 May 9 May 16 May 23 May 30 1 2 3 4 5 6 7 Reserve Money (1.1 + 1.2 + 1.3 = 2.1 + 2.2 + 2.3 + 2.4 + 2.5 – 2.6) 4829243 4676674 4911794 4933654 4936765 4943750 4962501 1 Components 1.1 Currency in Circulation 3724448 3571371 3811183 3841072 3842530 3842318 3835798 1.2 Bankers' Deposits with RBI 991488 1014134 994260 986527 988687 995829 1016571 1.3 ‘Other’ Deposits with RBI 113307 91169 106352 106055 105547 105603 110133 2 Sources 2.1 Net Reserve Bank Credit to Government 1508105 966036 1652602 1657068 1746157 1399983 1479315 2.2 Reserve Bank Credit to Banks -157261 -13394 -176575 -188007 -266825 -186035 -222572 2.3 Reserve Bank Credit to Commercial Sector 38246 11372 20762 19329 19079 17860 14393 2.4 Net Foreign Exchange Assets of RBI 5550947 5289318 5635295 5733311 5701583 5738608 5753296 2.5 Government's Currency Liabilities to the Public 36632 33858 36922 36922 36922 36922 37291 2.6 Net Non- Monetary Liabilities of RBI 2147427 1610515 2257212 2324969 2300152 2063588 2099222 118 RBI Bulletin July 2025CURRENT STATISTICS No. 12: Commercial Bank Survey (₹ Crore) Item Outstanding as on last reporting Fridays of the month/ reporting Fridays of the month 2024-25 2024 2025 May 31 May 2 May 16 May 30 1 2 3 4 5 1 Components 1.1 Aggregate Deposits of Residents 22228885 20759181 22692716 22540682 22826770 (22288331) (20854359) (22750049) (22596898) (22881810) 1.1.1 Demand Deposits 2698049 2506493 2918313 2841916 2988921 1.1.2 Time Deposits of Residents 19530836 18252688 19774404 19698766 19837850 (19590283) (18347866) (19831736) (19754982) (19892889) 1.1.2.1 Short-term Time Deposits 8788876 8213709 8898482 8864445 8927032 1.1.2.1.1 Certificates of Deposits (CDs) 527375 364274 513793 504085 516544 1.1.2.2 Long-term Time Deposits 10741960 10038978 10875922 10834322 10910817 1.2 Call/Term Funding from Financial Institutions 915248 738925 868679 893728 895727 2 Sources 2.1 Domestic Credit 25687563 23482493 25815029 25724820 25817693 (26156690) (24078453) (26272101) (26178110) (26263254) 2.1.1 Credit to the Government 6649537 6097590 6666426 6637365 6659581 (6697298) (6182473) (6713010) (6683948) (6706169) 2.1.2 Credit to the Commercial Sector 19038025 17384902 19148603 19087455 19158112 (19459392) (17895981) (19559092) (19494162) (19557085) 2.1.2.1 Bank Credit 17822605 16271803 17874468 17821005 17888404 (18243972) (16782882) (18284957) (18227712) (18287377) 2.1.2.1.1 Non-food Credit 17786074 16231544 17812022 17752927 17817823 (18207441) (16742623) (18222511) (18159634) (18216796) 2.1.2.2 Net Credit to Primary Dealers 15458 19488 26361 16141 18396 2.1.2.3 Investments in Other Approved Securities 630 1029 614 528 548 2.1.2.4 Other Investments (in non-SLR Securities) 1199332 1092582 1247161 1249781 1250763 2.2 Net Foreign Currency Assets of Commercial Banks (2.2.1-2.2.2-2.2.3) 54514 -131107 85785 38590 67787 2.2.1 Foreign Currency Assets 529621 259269 543751 505533 530021 2.2.2 Non-resident Foreign Currency Repatriable Fixed Deposits 292270 232847 284196 290689 290733 2.2.3 Overseas Foreign Currency Borrowings 182837 157529 173771 176253 171501 2.3 Net Bank Reserves (2.3.1+2.3.2-2.3.3) 1165137 1055398 1195539 1280929 1265837 2.3.1 Balances with the RBI 926001 951109 933070 928136 956086 2.3.2 Cash in Hand 81874 90895 85894 85968 87179 2.3.3 Loans and Advances from the RBI -157261 -13394 -176575 -266825 -222572 2.4 Capital Account 2581908 2476644 2749439 2824155 2840880 2.5 Other items (net) (2.1+2.2+2.3-2.4-1.1-1.2) 1181172 432034 785520 785775 587940 2.5.1 Other Demand and Time Liabilities (net of 2.2.3) 878795 809832 858562 823277 863072 2.5.2 Net Inter-Bank Liabilities (other than to PDs) 118268 180513 141173 129532 115343 Figures in parentheses include the impact of merger of a non-bank with a bank. No. 13: Scheduled Commercial Banks’ Investments (₹ Crore) Item As on 2024 2025 March 21, 2025 May 31 Apr. 18 May 16 May 30 1 2 3 4 5 1 SLR Securities 6697928 6183502 6693443 6684476 6706717 (6650167) (6098620) (6645677) (6637893) (6660129) 2 Other Government Securities (Non-SLR) 165500 165544 164975 165608 165432 3 Commercial Paper 63163 43225 68491 84713 82450 4 Shares issued by 4.1 PSUs 13874 12979 15359 13083 13263 4.2 Private Corporate Sector 95984 91501 102572 99648 98704 4.3 Others 7664 7227 8183 7945 7959 5 Bonds/Debentures issued by 5.1 PSUs 130308 114668 127368 135092 138380 5.2 Private Corporate Sector 248138 244991 257523 248358 254057 5.3 Others 150000 133707 153979 154167 157501 6 Instruments issued by 6.1 Mutual funds 119867 96688 144481 144371 127914 6.2 Financial institutions 204865 181756 198048 196796 204927 Notes: Data against column Nos. (1), (2) & (3) are final and for column Nos. (4) & (5) data are Provisional. 1. Data since July 14, 2023 include the impact of the merger of a non-bank with a bank. 2. Figures in parentheses exclude the impact of the merger. RBI Bulletin July 2025 119CURRENT STATISTICS No. 14: Business in India - All Scheduled Banks and All Scheduled Commercial Banks (₹ Crore) Item As on the Last Reporting Friday (in case of March)/ Last Friday All Scheduled Banks All Scheduled Commercial Banks 2024 2025 2024 2025 2024-25 2024-25 May Apr. May May Apr. May 1 2 3 4 5 6 7 8 Number of Reporting Banks 208 208 208 208 135 135 135 135 1 Liabilities to the Banking System 458011 527766 485692 507039 451305 523457 480018 500764 1.1 Demand and Time Deposits from Banks 315675 287696 354621 370999 309414 283850 349245 365140 1.2 Borrowings from Banks 112027 163135 107502 110574 111976 163095 107500 110552 1.3 Other Demand and Time Liabilities 30310 76934 23569 25466 29916 76511 23272 25071 2 Liabilities to Others 25053097 23268654 25236711 25610676 24557481 22793492 24727913 25102843 2.1 Aggregate Deposits 23055487 21544610 23332769 23662774 22580601 21087206 22840577 23172543 (22996040) (21449431) (23274855) (23607734) (22521155) (20992028) (22782663) (23117503) 2.1.1 Demand 2748263 2556468 2680951 3038379 2698049 2506493 2630258 2988921 2.1.2 Time 20307224 18988142 20651818 20624394 19882552 18580713 20210319 20183622 2.2 Borrowings 920568 743310 888614 900194 915248 738925 884265 895727 2.3 Other Demand and Time Liabilities 1077042 980734 1015328 1047708 1061632 967361 1003071 1034574 3 Borrowings from Reserve Bank 311466 71305 23088 6516 311466 71305 23088 6516 3.1 Against Usance Bills /Promissory Notes - - - - - - - - 3.2 Others 311466 71305 23088 6516 311466 71305 23088 6516 4 Cash in Hand and Balances with Reserve Bank 985044 1064380 1051971 1064842 964289 1042004 1030327 1043265 4.1 Cash in Hand 84399 93275 85275 89605 81874 90895 82976 87179 4.2 Balances with Reserve Bank 900645 971105 966696 975237 882415 951109 947351 956086 5 Assets with the Banking System 432645 430488 464632 493680 348496 362432 372327 403817 5.1 Balances with Other Banks 273720 233894 302288 331989 215801 185597 237512 266765 5.1.1 In Current Account 13239 10711 12946 13853 10619 8068 10653 11435 5.1.2 In Other Accounts 260481 223183 289342 318135 205182 177529 226859 255331 5.2 Money at Call and Short Notice 44772 27885 40106 40350 25838 13028 19488 22813 5.3 Advances to Banks 43856 53558 41915 38542 39504 51405 38818 36148 5.4 Other Assets 70296 115150 80323 82799 67353 112401 76510 78092 6 Investment 6850574 6336009 6837193 6861687 6697928 6183502 6682673 6706717 (6802814) (6251126) (6790609) (6815099) (6650167) (6098620) (6636090) (6660129) 6.1 Government Securities 6842024 6328175 6828397 6853140 6697298 6182473 6682108 6706169 6.2 Other Approved Securities 8550 7834 8796 8547 630 1029 566 548 7 Bank Credit 18708286 17219029 18680190 18753741 18243972 16782882 18214777 18287377 (18286919) (16707950) (18266000) (18354768) (17822605) (16271803) (17800587) (17888404) 7a Food Credit 87145 90882 98699 122554 36531 40259 46725 70581 7.1 Loans, Cash-credits and Overdrafts 18370704 16902163 18337163 18412982 17909851 16469360 17875224 17949958 7.2 Inland Bills-Purchased 76523 64372 80991 80744 74963 64367 79561 79467 7.3 Inland Bills-Discounted 222320 210953 224117 223957 221059 208274 222677 222449 7.4 Foreign Bills-Purchased 15357 16346 14893 14063 15122 16125 14661 13866 7.5 Foreign Bills-Discounted 23382 25195 23026 21995 22977 24756 22655 21636 Notes: 1. Data in column Nos. (4) & (8) are Provisional. 2. Data since July 2023 include the impact of the merger of a non-bank with a bank. 3. Figures in parentheses exclude the impact of the merger. 120 RBI Bulletin July 2025CURRENT STATISTICS No. 15: Deployment of Gross Bank Credit by Major Sectors (₹ Crore) Outstanding as on Growth(%) Mar. 21, Financial Sector 2025 2024 2025 year so far Y-o-Y May 31 Apr. 18 May 30 2025-26 2025 1 2 3 4 % % I. Bank Credit (II + III) 18243936 16784076 18186759 18287597 0.2 9.0 (17822569) (16272998) (17774269) (17888624) (0.4) (9.9) II. Food Credit 36531 40259 32126 70581 93.2 75.3 III. Non-food Credit 18207404 16743817 18154634 18217016 0.1 8.8 (17786038) (16232739) (17742144) (17818043) (0.2) (9.8) 1. Agriculture & Allied Activities 2287071 2139045 2309631 2298815 0.5 7.5 2. Industry (Micro and Small, Medium and Large) 3937149 3703069 3895471 3881567 -1.4 4.8 (3925089) (3687055) (3883660) (3869110) (-1.4) (4.9) 2.1 Micro and Small 791721 736404 798669 837079 5.7 13.7 2.2 Medium 360475 313398 365378 365914 1.5 16.8 2.3 Large 2784953 2653268 2731423 2678574 -3.8 1.0 3. Services 5161462 4681418 5088547 5090833 -1.4 8.7 (5094021) (4587724) (5012374) (5018221) (-1.5) (9.4) 3.1 Transport Operators 258409 243044 260093 263377 1.9 8.4 3.2 Computer Software 32915 25751 33451 33981 3.2 32.0 3.3 Tourism, Hotels & Restaurants 83091 78408 84692 85206 2.5 8.7 3.4 Shipping 7305 6908 7778 7793 6.7 12.8 3.5 Aviation 46026 45556 46540 46326 0.7 1.7 3.6 Professional Services 195956 180059 194449 196476 0.3 9.1 3.7 Trade 1186787 1054911 1163877 1167392 -1.6 10.7 3.7.1. Wholesale Trade¹ 648619 556008 621874 634298 -2.2 14.1 3.7.2 Retail Trade 538168 498903 542003 533094 -0.9 6.9 3.8 Commercial Real Estate 532757 479120 549472 549874 3.2 14.8 (488689) (415390) (503090) (505800) (3.5) (21.8) 3.9 Non-Banking Financial Companies (NBFCs)² of which, 1636098 1568073 1610587 1562646 -4.5 -0.3 3.9.1 Housing Finance Companies (HFCs) 323146 331250 314881 308740 -4.5 -6.8 3.9.2 Public Financial Institutions (PFIs) 228678 226675 220806 207146 -9.4 -8.6 3.10 Other Services³ 1182118 999586 1137607 1177763 -0.4 17.8 (1166422) (980269) (1116037) (1157271) (-0.8) (18.1) 4. Personal Loans 5952299 5456636 5980893 6061987 1.8 11.1 (5610478) (5055303) (5656449) (5748146) (2.5) (13.7) 4.1 Consumer Durables 23402 24682 23279 23715 1.3 -3.9 4.2 Housing 3010477 2786598 3008941 3037366 0.9 9.0 (2689068) (2409207) (2704137) (2742752) (2.0) (13.8) 4.3 Advances against Fixed Deposits 141101 123334 143518 142479 1.0 15.5 4.4 Advances to Individuals against share & bonds 10080 9262 10488 9412 -6.6 1.6 4.5 Credit Card Outstanding 284366 267979 287172 290678 2.2 8.5 4.6 Education 137456 121102 137454 138122 0.5 14.1 4.7 Vehicle Loans 622794 586829 629691 637766 2.4 8.7 4.8 Loan against gold jewellery⁴ 208735 116777 223034 251369 20.4 115.3 4.9 Other Personal Loans 1513889 1420073 1517316 1531082 1.1 7.8 (1493525) (1396233) (1497721) (1511895) (1.2) (8.3) 5. Priority Sector (Memo) (i) Agriculture & Allied Activities⁵ 2287804 2078112 2233685 2277560 -0.4 9.6 (ii) Micro & Small Enterprises⁶ 2240503 2030754 2313293 2410013 7.6 18.7 (iii) Medium Enterprises⁷ 601451 502496 604299 610129 1.4 21.4 (iv) Housing 746651 762822 744228 750390 0.5 -1.6 (665107) (670883) (663951) (671007) (0.9) (0.0) (v) Education Loans 62825 61277 62637 63146 0.5 3.0 (vi) Renewable Energy 10325 5923 11979 12250 18.6 106.8 (vii) Social Infrastructure 1316 2674 1147 827 -37.2 -69.1 (viii) Export Credit 11688 11218 13086 12021 2.8 7.2 (ix) Others 47900 62047 48689 48675 1.6 -21.6 (x) Weaker Sections including net PSLC- SF/MF 1820904 1670313 1789687 1832723 0.6 9.7 Notes: (1) Data are provisional. Bank credit, Food credit and Non-food credit data are based on Section-42 return, which covers all scheduled commercial banks (SCBs), while sectoral non-food credit data are based on sector-wise and industry-wise bank credit (SIBC) return, which covers select banks accounting for about 95 per cent of total non-food credit extended by all SCBs, pertaining to the last reporting Friday of the month. (2) Data since July 28, 2023 include the impact of the merger of a non-bank with a bank. (3) Figures in parentheses exclude the impact of the merger. 1 Wholesale trade includes food procurement credit outside the food credit consortium. 2 NBFCs include HFCs, PFIs, Microfinance Institutions (MFIs), NBFCs engaged in gold loan and others. 3 “Other Services” include Mutual Fund (MFs), Banking and Finance other than NBFCs and MFs, and other services which are not indicated elsewhere under services. 4 Since May 2024, a bank has changed the classification of a category of agricultural loan into “Loans against gold jewellery” under retail segment. 5 “Agriculture and Allied Activities” under the priority sector also include priority sector lending certificates (PSLCs). 6 “Micro and Small Enterprises” under the priority sector include credit to micro and small enterprises in industry and services sectors and also include PSLCs. 7 “Medium Enterprises” under the priority sector include credit to medium enterprises in industry and services sectors. RBI Bulletin July 2025 121CURRENT STATISTICS No. 16: Industry-wise Deployment of Gross Bank Credit (₹ Crore) Outstanding as on Growth(%) Financial 2024 2025 Y-o-Y Mar. 21, year so far Industry 2025 May 31 Apr. 18 May 30 2025-26 2025 1 2 3 4 % % 2 Industries (2.1 to 2.19) 3937149 3703069 3895471 3881567 -1.4 4.8 (3925089) (3687055) (3883660) (3869110) (-1.4) (4.9) 2.1 Mining & Quarrying (incl. Coal) 56756 55330 53970 53904 -5.0 -2.6 2.2 Food Processing 219527 207427 224436 223657 1.9 7.8 2.2.1 Sugar 28522 26622 28381 25414 -10.9 -4.5 2.2.2 Edible Oils & Vanaspati 20927 18769 21239 20413 -2.5 8.8 2.2.3 Tea 5084 5671 4981 4923 -3.2 -13.2 2.2.4 Others 164994 156365 169834 172908 4.8 10.6 2.3 Beverage & Tobacco 35513 30994 34580 34191 -3.7 10.3 2.4 Textiles 277267 255646 275379 272922 -1.6 6.8 2.4.1 Cotton Textiles 107227 97935 103692 103651 -3.3 5.8 2.4.2 Jute Textiles 4288 4259 4333 4324 0.8 1.5 2.4.3 Man-Made Textiles 49091 44821 49321 47882 -2.5 6.8 2.4.4 Other Textiles 116661 108631 118032 117065 0.3 7.8 2.5 Leather & Leather Products 12980 12454 13157 13164 1.4 5.7 2.6 Wood & Wood Products 27826 24279 27842 28239 1.5 16.3 2.7 Paper & Paper Products 52848 46964 52465 52519 -0.6 11.8 2.8 Petroleum, Coal Products & Nuclear Fuels 154178 139874 135500 137814 -10.6 -1.5 2.9 Chemicals & Chemical Products 267814 256291 267186 268394 0.2 4.7 2.9.1 Fertiliser 32011 39051 31850 32607 1.9 -16.5 2.9.2 Drugs & Pharmaceuticals 88738 83250 86357 85831 -3.3 3.1 2.9.3 Petro Chemicals 26892 25091 29823 31822 18.3 26.8 2.9.4 Others 120172 108899 119157 118134 -1.7 8.5 2.10 Rubber, Plastic & their Products 103464 88404 103555 101907 -1.5 15.3 2.11 Glass & Glassware 13443 12235 13668 13673 1.7 11.8 2.12 Cement & Cement Products 59752 59704 58452 59400 -0.6 -0.5 2.13 Basic Metal & Metal Product 433502 389195 436006 430541 -0.7 10.6 2.13.1 Iron & Steel 300156 275231 299924 293133 -2.3 6.5 2.13.2 Other Metal & Metal Product 133345 113965 136083 137409 3.0 20.6 2.14 All Engineering 240135 199046 240016 239968 -0.1 20.6 2.14.1 Electronics 52862 43828 52978 52810 -0.1 20.5 2.14.2 Others 187272 155218 187038 187158 -0.1 20.6 2.15 Vehicles, Vehicle Parts & Transport Equipment 119057 111780 119583 117522 -1.3 5.1 2.16 Gems & Jewellery 85734 82760 90892 86968 1.4 5.1 2.17 Construction 150701 136249 150407 150908 0.1 10.8 2.18 Infrastructure 1322831 1337701 1311402 1304228 -1.4 -2.5 2.18.1 Power 682953 658116 687776 683712 0.1 3.9 2.18.2 Telecommunications 118940 134415 108302 101263 -14.9 -24.7 2.18.3 Roads 311219 335697 313483 316339 1.6 -5.8 2.18.4 Airports 9156 7556 9293 9428 3.0 24.8 2.18.5 Ports 5916 6412 5467 5182 -12.4 -19.2 2.18.6 Railways 13595 13203 12121 11487 -15.5 -13.0 2.18.7 Other Infrastructure 181052 182303 174959 176817 -2.3 -3.0 2.19 Other Industries 303822 256737 286975 291648 -4.0 13.6 Notes: (1) Data since July 28, 2023 include the impact of the merger of a non-bank with a bank. (2) Figures in parentheses exclude the impact of the merger. 122 RBI Bulletin July 2025CURRENT STATISTICS No. 17: State Co-operative Banks Maintaining Accounts with the Reserve Bank of India (₹ Crore) Last Reporting Friday (in case of March)/Last Friday/ Item Reporting Friday 2024 2025 2024-25 Apr. 26 Feb. 28 Mar. 07 Mar. 21 Mar. 28 Apr. 04 Apr. 18 Apr. 25 1 2 3 4 5 6 7 8 9 Number of Reporting Banks 34 33 34 34 34 34 34 34 34 1 Aggregate Deposits (2.1.1.2+2.2.1.2) 146871.0 135856.4 141021.9 141431.2 142953.8 146871.0 148566.3 145054.5 147251.7 2 Demand and Time Liabilities 2.1 Demand Liabilities 2921 5.6 28654.1 25377.7 26240.2 29033.2 29215.6 29 503.5 2727 7.2 26936 .5 2.1.1 Deposits 2.1.1.1 Inter-Bank 9022.9 7965.2 6336.1 7072.2 8543.2 9022.9 9328.0 8714.1 8298.2 2.1.1.2 Others 14063.9 14417.9 13305.9 13485.0 13597.0 14063.9 14165.7 136 6 8.7 14069.6 2.1.2 Borrowings from Banks 700.0 679.5 537.7 445.0 827.0 700.0 350.0 2.1.3 Other Demand Liabilities 5428.9 5591.5 5197.9 5238.0 6066.1 5428.9 6009.9 4544.4 4568.8 2.2 Time Liabilities 201100.7 189681.3 181395.7 182829.0 188026.7 201100.7 203978.3 199471.9 199412.2 2.2.1 Deposits 2.2.1.1 Inter-Bank 66874.3 66557.0 52005.7 53235.4 57013.2 66874.3 68122.4 66627.7 64779.7 2.2.1.2 Others 132807.1 121438.5 127715.9 127946.1 129356.8 132807.1 134400.6 131385.8 133182.1 2.2.2 Borrowings from Banks 643.9 652.8 650.3 650.3 650.3 643.9 618.0 615.5 615.5 2.2.3 Other Time Liabilities 775.4 1033.0 1023.8 997.2 1006.3 775.4 837.3 842.9 834.9 3 Borrowing from Reserve Bank 699.5 699.8 699.7 699.5 699.8 499.9 499.8 4 Borrowings from a notified bank / Government 126928.5 86593.2 115298.7 116039.2 117531.6 126928.5 123828.0 120340.2 117224.0 4.1 Demand 53459.8 23967.7 46815.1 47552.2 47476.4 53459.8 51798.7 50684.0 50291.4 4.2 Time 73468.7 62625.5 68483.6 68486.9 70055.2 73468.7 72029.3 69656.2 66932.6 5 Cash in Hand and Balances with Reserve Bank 13390.9 12135.1 10776.7 12029.4 12049.8 13390.9 15154.0 15967.2 19115.8 5.1 Cash in Hand 1052.1 777.3 854.2 1226.3 961.5 1052.1 1157.2 813.7 741.3 5.2 Balance with Reserve Bank 12338.8 11357.8 9922.5 10803.1 11088.4 12338.8 13996.8 15153.5 18374.6 6 Balances with Other Banks in Current Account 1656.3 1625.6 1281.1 1095.8 1355.2 1656.3 1727.6 1856.2 1487.3 7 Investments in Government Securities 77220.1 75501.1 76364.1 75604.6 75941.0 77220.1 77215.6 79265.3 78742.6 8 Money at Call and Short Notice 26531.1 23246.7 16049.2 19365.0 18381.0 26531.1 30596.7 22162.6 20185.1 9 Bank Credit (10.1+11) 174828.8 137382.4 171858.1 171435.7 171861.3 174828.8 174139.0 174573.0 185733.8 10 Advances 10.1 Loans, Cash-Credits and Overdrafts 174590.4 137200.4 171681.7 171259.2 171672.1 174590.4 173853.1 174312.5 185468.1 10.2 Due from Banks 12460 7.6 136586.9 116430.1 117656.1 118507.5 1 24607.6 121 776.9 11942 6.7 118050. 3 11 Bills Purchased and Discounted 238.4 182.0 176.5 176.5 189.2 238.4 285.8 260.5 265.6 RBI Bulletin July 2025 123CURRENT STATISTICS Prices and Production No. 18: Consumer Price Index (Base: 2012=100) Group/Sub group 2024-25 Rural Urban Combined Rural Urban Combined Jun.24 May 25 Jun.25 (P) Jun.24 May 25 Jun.25 (P) Jun.24 May 25 Jun.25 (P) 1 2 3 4 5 6 7 8 9 10 11 12 1 Food and beverages 198.6 205.3 201.1 195.5 193.2 194.8 203.5 201.0 203.4 198.4 196.1 198.0 1.1 Cereals and products 195.0 193.7 194.6 190.1 197.8 197.1 190.0 197.8 197.5 190.1 197.8 197.2 1.2 Meat and fish 222.3 231.9 225.7 231.4 225.5 227.0 240.5 235.3 237.8 234.6 228.9 230.8 1.3 Egg 192.8 197.5 194.6 188.6 185.1 192.9 192.9 191.7 198.8 190.3 187.7 195.2 1.4 Milk and products 186.3 187.0 186.6 185.1 189.4 190.0 185.8 191.1 191.5 185.4 190.0 190.6 1.5 Oils and fats 175.4 165.5 171.8 162.2 191.6 193.7 156.1 179.2 179.4 160.0 187.0 188.4 1.6 Fruits 188.3 194.2 191.0 179.3 204.5 203.8 190.0 210.1 211.8 184.3 207.1 207.5 1.7 Vegetables 222.1 269.6 238.2 215.9 164.0 174.8 269.7 202.3 218.8 234.2 177.0 189.7 1.8 Pulses and products 208.0 213.5 209.8 208.8 187.0 184.6 215.1 192.2 189.0 210.9 188.8 186.1 1.9 Sugar and confectionery 130.4 132.6 131.2 130.0 134.5 134.7 132.1 136.3 136.4 130.7 135.1 135.3 1.10 Spices 228.5 223.9 227.0 229.2 221.7 221.7 224.8 219.6 219.0 227.7 221.0 220.8 1.11 Non-alcoholic beverages 185.2 173.9 180.5 183.0 190.2 190.0 171.3 179.5 180.0 178.1 185.7 185.8 1.12 Prepared meals, snacks, sweets 199.4 209.7 204.2 197.3 204.0 204.6 206.4 215.9 216.7 201.5 209.5 210.2 2 Pan, tobacco and intoxicants 207.3 212.6 208.7 206.1 210.4 211.0 212.1 216.7 217.3 207.7 212.1 212.7 3 Clothing and footwear 197.9 186.7 193.5 196.3 200.7 201.0 185.1 189.9 190.4 191.9 196.4 196.8 3.1 Clothing 198.8 188.8 194.9 197.1 201.7 202.0 187.3 192.1 192.6 193.2 197.9 198.3 3.2 Footwear 192.7 174.7 185.2 191.4 194.8 195.1 173.3 177.5 177.9 183.9 187.6 188.0 4 Housing -- 181.5 181.5 -- -- -- 179.1 185.8 184.9 179.1 185.8 184.9 5 Fuel and light 181.2 169.7 176.9 180.5 184.7 184.1 169.3 175.1 175.3 176.3 181.1 180.8 6 Miscellaneous 189.3 180.7 185.1 186.3 195.7 196.7 177.9 186.3 187.4 182.2 191.1 192.2 6.1 Household goods and services 185.7 177.1 181.6 184.1 187.7 188.1 175.2 180.0 180.5 179.9 184.1 184.5 6.2 Health 198.4 193.2 196.4 196.0 203.9 204.6 190.7 198.6 199.3 194.0 201.9 202.6 6.3 Transport and communication 175.5 164.8 169.9 172.0 178.7 179.0 161.9 167.4 167.9 166.7 172.8 173.2 6.4 Recreation and amusement 180.1 175.5 177.5 178.6 181.8 182.3 173.7 178.4 178.6 175.8 179.9 180.2 6.5 Education 190.8 186.2 188.1 188.1 194.2 195.8 183.7 190.2 192.0 185.5 191.9 193.6 6.6 Personal care and effects 204.3 206.2 205.1 199.2 225.6 228.5 200.8 227.5 230.7 199.9 226.4 229.4 General Index (All Groups) 194.9 190.0 192.6 192.2 194.3 195.5 187.8 191.5 192.6 190.2 193.0 194.2 Source: National Statistical Office, Ministry of Statistics and Programme Implementation, Government of India. P: Provisional No. 19: Other Consumer Price Indices Item Base Year Linking 2024-25 2024 2025 Factor May Apr. May 1 2 3 4 5 6 1 Consumer Price Index for Industrial Workers 2016 2.88 142.6 139.9 143.5 144.0 2 Consumer Price Index for Agricultural Labourers 1986-87 5.89 1299 1269 1307 1305 3 Consumer Price Index for Rural Labourers 1986-87 - 1311 1281 1320 1319 Source: Labour Bureau, Ministry of Labour and Employment, Government of India. No. 20: Monthly Average Price of Gold and Silver in Mumbai Item 2024-25 2024 2025 May Apr. May 1 2 3 4 1 Standard Gold (₹ per 10 grams) 75842 72135 93091 94590 2 Silver (₹ per kilogram) 89131 86866 95309 96026 Source: India Bullion & Jewellers Association Ltd., Mumbai for Gold and Silver prices in Mumbai. 124 RBI Bulletin July 2025CURRENT STATISTICS No. 21: Wholesale Price Index (Base: 2011-12 = 100) Commodities Weight 2024-25 2024 2025 Jun. Apr. May (P) Jun.(P) 1 2 3 4 5 6 1 ALL COMMODITIES 100.000 154.9 154.0 154.2 154.1 153.8 1.1 PRIMARY ARTICLES 22.618 192.5 192.3 185.4 184.3 185.8 1.1.1 FOOD ARTICLES 15.256 205.3 205.5 197.4 196.2 197.8 1.1.1.1 Food Grains (Cereals+Pulses) 3.462 210.1 206.6 206.6 204.0 203.0 1.1.1.2 Fruits & Vegetables 3.475 241.4 245.4 209.7 202.7 212.2 1.1.1.3 Milk 4.440 185.8 185.5 187.3 188.9 189.7 1.1.1.4 Eggs, Meat & Fish 2.402 173.4 174.5 172.1 176.6 174.0 1.1.1.5 Condiments & Spices 0.529 232.7 237.2 204.7 200.8 199.5 1.1.1.6 Other Food Articles 0.948 213.6 209.8 226.9 224.9 222.8 1.1.2 NON-FOOD ARTICLES 4.119 161.7 157.3 160.1 158.9 160.9 1.1.2.1 Fibres 0.839 161.4 160.2 163.4 164.9 163.2 1.1.2.2 Oil Seeds 1.115 181.5 180.0 183.0 184.2 190.6 1.1.2.3 Other non-food Articles 1.960 138.7 135.8 139.5 137.8 137.7 1.1.2.4 Floriculture 0.204 277.4 228.8 219.2 198.5 210.9 1.1.3 MINERALS 0.833 229.0 229.6 228.0 228.1 231.5 1.1.3.1 Metallic Minerals 0.648 219.2 225.4 218.8 218.8 223.9 1.1.3.2 Other Minerals 0.185 263.4 244.4 260.5 260.5 258.1 1.1.4 CRUDE PETROLEUM & NATURAL GAS 2.410 151.3 156.0 137.4 137.4 136.8 1.2 FUEL & POWER 13.152 150.0 146.9 145.7 146.7 143.0 1.2.1 COAL 2.138 135.6 135.8 136.1 137.0 136.9 1.2.1.1 Coking Coal 0.647 143.4 143.4 144.9 146.4 146.4 1.2.1.2 Non-Coking Coal 1.401 125.8 125.8 126.2 126.6 126.6 1.2.1.3 Lignite 0.090 232.4 236.0 227.4 231.2 227.3 1.2.2 MINERAL OILS 7.950 156.2 155.7 150.6 147.5 146.7 1.2.3 ELECTRICITY 3.064 144.1 132.0 139.8 151.6 137.8 1.3 MANUFACTURED PRODUCTS 64.231 142.6 142.0 144.9 144.9 144.8 1.3.1 MANUFACTURE OF FOOD PRODUCTS 9.122 172.0 165.9 179.5 178.4 177.5 1.3.1.1 Processing and Preserving of meat 0.134 155.7 157.2 157.0 157.3 158.2 1.3.1.2 Processing and Preserving of fish, Crustaceans, Molluscs and products thereof 0.204 144.9 143.8 146.2 146.9 146.2 1.3.1.3 Processing and Preserving of fruit and Vegetables 0.138 132.6 132.1 135.4 136.0 135.7 1.3.1.4 Vegetable and Animal oils and Fats 2.643 168.5 148.4 189.5 186.7 182.6 1.3.1.5 Dairy products 1.165 180.8 180.1 184.0 183.5 183.9 1.3.1.6 Grain mill products 2.010 186.9 185.1 187.0 186.4 185.5 1.3.1.7 Starches and Starch products 0.110 167.0 165.6 159.2 157.6 154.1 1.3.1.8 Bakery products 0.215 170.5 166.0 176.6 175.9 176.7 1.3.1.9 Sugar, Molasses & honey 1.163 139.1 139.2 144.0 143.9 143.2 1.3.1.10 Cocoa, Chocolate and Sugar confectionery 0.175 160.6 153.3 174.6 176.4 178.7 1.3.1.11 Macaroni, Noodles, Couscous and Similar farinaceous products 0.026 156.7 151.5 162.4 158.7 159.7 1.3.1.12 Tea & Coffee products 0.371 190.7 203.2 193.6 190.2 201.7 1.3.1.13 Processed condiments & salt 0.163 192.6 193.6 189.9 189.5 189.4 1.3.1.14 Processed ready to eat food 0.024 152.7 152.9 156.4 156.5 156.2 1.3.1.15 Health supplements 0.225 185.1 176.3 188.8 187.2 189.4 1.3.1.16 Prepared animal feeds 0.356 204.1 206.7 197.7 198.8 199.6 1.3.2 MANUFACTURE OF BEVERAGES 0.909 134.1 133.4 135.5 135.6 135.6 1.3.2.1 Wines & spirits 0.408 136.0 134.3 138.4 138.8 138.7 1.3.2.2 Malt liquors and Malt 0.225 138.7 139.0 140.0 139.6 139.4 1.3.2.3 Soft drinks; Production of mineral waters and Other bottled waters 0.275 127.5 127.4 127.6 127.6 127.8 1.3.3 MANUFACTURE OF TOBACCO PRODUCTS 0.514 177.8 176.2 181.5 182.4 181.1 1.3.3.1 Tobacco products 0.514 177.8 176.2 181.5 182.4 181.1 RBI Bulletin July 2025 125CURRENT STATISTICS No. 21: Wholesale Price Index (Contd.) (Base: 2011-12 = 100) Commodities Weight 2024-25 2024 2025 Jun. Apr. May (P) Jun.(P) 1 2 3 4 5 6 1.3.4 MANUFACTURE OF TEXTILES 4.881 136.3 136.4 136.9 136.6 136.6 1.3.4.1 Preparation and Spinning of textile fibres 2.582 121.4 122.1 120.9 120.5 120.3 1.3.4.2 Weaving & Finishing of textiles 1.509 158.3 158.1 160.4 160.3 160.6 1.3.4.3 Knitted and Crocheted fabrics 0.193 124.0 124.1 124.8 124.8 125.2 1.3.4.4 Made-up textile articles, Except apparel 0.299 160.4 159.3 160.7 161.5 160.9 1.3.4.5 Cordage, Rope, Twine and Netting 0.098 142.7 138.8 150.5 150.7 151.8 1.3.4.6 Other textiles 0.201 134.9 135.1 134.4 133.1 132.1 1.3.5 MANUFACTURE OF WEARING APPAREL 0.814 153.4 152.3 154.2 155.0 155.6 1.3.5.1 Manufacture of Wearing Apparel (woven), Except fur Apparel 0.593 150.9 150.3 152.2 153.2 153.7 1.3.5.2 Knitted and Crocheted apparel 0.221 160.1 157.6 159.6 159.7 160.5 1.3.6 MANUFACTURE OF LEATHER AND RELATED PRODUCTS 0.535 125.3 124.6 128.2 127.0 127.6 1.3.6.1 Tanning and Dressing of leather; Dressing and Dyeing of fur 0.142 106.1 105.1 111.7 110.9 112.3 1.3.6.2 Luggage, HandbAgs, Saddlery and Harness 0.075 142.5 141.8 143.3 141.0 141.3 1.3.6.3 Footwear 0.318 129.7 129.2 131.9 130.9 131.2 1.3.7 MANUFACTURE OF WOOD AND PRODUCTS OF WOOD AND CORK 0.772 149.2 149.5 150.6 150.2 150.4 1.3.7.1 Saw milling and Planing of wood 0.124 141.1 139.6 143.5 143.0 142.6 1.3.7.2 Veneer sheets; Manufacture of plywood, Laminboard, Particle board and Other panels and Boards 0.493 148.6 149.3 149.6 149.4 149.4 1.3.7.3 Builder's carpentry and Joinery 0.036 215.3 215.4 216.7 215.4 215.4 1.3.7.4 Wooden containers 0.119 140.6 141.4 142.2 141.3 143.3 1.3.8 MANUFACTURE OF PAPER AND PAPER PRODUCTS 1.113 139.2 138.4 140.6 140.4 140.5 1.3.8.1 Pulp, Paper and Paperboard 0.493 144.6 144.3 145.0 144.4 144.3 1.3.8.2 Corrugated paper and Paperboard and Containers of paper and Paperboard 0.314 147.3 144.6 151.5 151.2 151.2 1.3.8.3 Other articles of paper and Paperboard 0.306 122.4 122.6 122.5 122.8 123.4 1.3.9 PRINTING AND REPRODUCTION OF RECORDED MEDIA 0.676 187.3 185.2 189.7 189.8 189.6 1.3.9.1 Printing 0.676 187.3 185.2 189.7 189.8 189.6 1.3.10 MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS 6.465 136.5 136.4 137.6 137.2 137.2 1.3.10.1 Basic chemicals 1.433 138.6 137.8 143.0 142.4 141.8 1.3.10.2 Fertilizers and Nitrogen compounds 1.485 143.1 143.3 142.7 143.3 143.0 1.3.10.3 Plastic and Synthetic rubber in primary form 1.001 133.6 134.1 134.7 133.5 133.8 1.3.10.4 Pesticides and Other agrochemical products 0.454 128.8 128.0 131.7 130.2 132.1 1.3.10.5 Paints, Varnishes and Similar coatings, Printing ink and Mastics 0.491 139.5 139.0 138.6 137.5 137.2 1.3.10.6 Soap and Detergents, Cleaning and Polishing preparations, Perfumes and Toilet preparations 0.612 139.7 139.0 141.7 142.0 142.3 1.3.10.7 Other chemical products 0.692 135.4 135.8 134.5 133.9 133.6 1.3.10.8 Man-made fibres 0.296 104.9 107.2 101.9 101.3 102.9 1.3.11 MANUFACTURE OF PHARMACEUTICALS, MEDICINAL CHEMICAL AND BOTANICAL PRODUCTS 1.993 144.3 144.0 145.5 145.5 145.9 1.3.11.1 Pharmaceuticals, Medicinal chemical and Botanical products 1.993 144.3 144.0 145.5 145.5 145.9 1.3.12 MANUFACTURE OF RUBBER AND PLASTICS PRODUCTS 2.299 129.0 128.8 130.3 129.5 129.4 1.3.12.1 Rubber Tyres and Tubes; Retreading and Rebuilding of Rubber Tyres 0.609 115.6 113.6 117.6 116.1 115.9 1.3.12.2 Other Rubber Products 0.272 112.1 110.4 114.2 113.6 113.2 1.3.12.3 Plastics products 1.418 138.1 138.9 138.9 138.2 138.3 1.3.13 MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS 3.202 131.5 130.7 132.1 133.2 133.2 1.3.13.1 Glass and Glass products 0.295 163.2 162.7 163.7 163.9 163.6 1.3.13.2 Refractory products 0.223 121.6 118.5 121.9 123.1 123.1 1.3.13.3 Clay Building Materials 0.121 124.4 112.7 130.5 133.5 131.0 1.3.13.4 Other Porcelain and Ceramic Products 0.222 124.6 124.4 124.9 125.9 125.8 1.3.13.5 Cement, Lime and Plaster 1.645 130.4 130.3 130.5 132.1 132.3 126 RBI Bulletin July 2025CURRENT STATISTICS No. 21: Wholesale Price Index (Contd.) (Base: 2011-12 = 100) Commodities Weight 2024-25 2024 2025 Jun. Apr. May (P) Jun.(P) 1 2 3 4 5 6 1.3.13.6 Articles of Concrete, Cement and Plaster 0.292 139.2 139.7 140.4 140.6 140.2 1.3.13.7 Cutting, Shaping and Finishing of Stone 0.234 134.4 132.3 137.2 137.8 138.8 1.3.13.8 Other Non-Metallic Mineral Products 0.169 95.2 97.4 94.2 94.2 94.6 1.3.14 MANUFACTURE OF BASIC METALS 9.646 139.7 143.3 140.1 140.2 138.8 1.3.14.1 Inputs into steel making 1.411 133.6 140.3 134.1 132.9 131.8 1.3.14.2 Metallic Iron 0.653 141.8 150.9 136.5 134.5 129.5 1.3.14.3 Mild Steel - Semi Finished Steel 1.274 117.9 121.7 118.9 118.7 117.2 1.3.14.4 Mild Steel -Long Products 1.081 140.4 143.6 140.8 138.6 137.4 1.3.14.5 Mild Steel - Flat products 1.144 134.2 140.6 134.7 135.4 134.6 1.3.14.6 Alloy steel other than Stainless Steel- Shapes 0.067 135.4 141.3 136.6 136.2 134.2 1.3.14.7 Stainless Steel - Semi Finished 0.924 131.1 132.9 132.8 137.4 128.8 1.3.14.8 Pipes & tubes 0.205 164.7 166.1 165.3 166.4 167.2 1.3.14.9 Non-ferrous metals incl. precious metals 1.693 157.4 158.2 159.4 160.1 161.3 1.3.14.10 Castings 0.925 144.9 144.5 143.9 143.1 144.0 1.3.14.11 Forgings of steel 0.271 172.2 174.4 174.3 176.6 177.9 1.3.15 MANUFACTURE OF FABRICATED METAL PRODUCTS, EXCEPT MACHINERY AND EQUIPMENT 3.155 136.0 136.1 136.8 137.4 137.2 1.3.15.1 Structural Metal Products 1.031 130.8 130.4 131.7 131.5 131.5 1.3.15.2 Tanks, Reservoirs and Containers of Metal 0.660 149.5 151.6 152.2 153.4 151.5 1.3.15.3 Steam generators, Except Central Heating Hot Water Boilers 0.145 109.8 109.6 110.4 110.6 112.1 1.3.15.4 Forging, Pressing, Stamping and Roll-Forming of Metal; Powder Metallurgy 0.383 138.0 135.3 135.8 135.8 136.7 1.3.15.5 Cutlery, Hand Tools and General Hardware 0.208 102.0 101.5 102.5 103.6 104.7 1.3.15.6 Other Fabricated Metal Products 0.728 144.9 145.8 145.8 147.2 146.6 1.3.16 MANUFACTURE OF COMPUTER, ELECTRONIC AND OPTICAL PRODUCTS 2.009 121.5 121.9 121.7 122.0 122.3 1.3.16.1 Electronic Components 0.402 117.9 117.7 119.4 120.4 120.3 1.3.16.2 Computers and Peripheral Equipment 0.336 134.2 135.3 131.4 131.4 131.4 1.3.16.3 Communication Equipment 0.310 146.0 145.9 146.6 146.8 146.9 1.3.16.4 Consumer Electronics 0.641 101.1 103.3 101.1 100.9 100.8 1.3.16.5 Measuring, Testing, Navigating and Control equipment 0.181 119.9 117.8 121.9 121.9 126.6 1.3.16.6 Watches and Clocks 0.076 167.9 163.0 171.9 174.5 173.7 1.3.16.7 Irradiation, Electromedical and Electrotherapeutic equipment 0.055 114.4 109.9 111.3 111.7 109.9 1.3.16.8 Optical instruments and Photographic equipment 0.008 107.4 109.8 111.8 111.8 114.6 1.3.17 MANUFACTURE OF ELECTRICAL EQUIPMENT 2.930 133.7 133.6 134.3 134.4 134.6 1.3.17.1 Electric motors, Generators, Transformers and Electricity distribution and Control apparatus 1.298 132.3 131.3 132.9 132.8 133.0 1.3.17.2 Batteries and Accumulators 0.236 141.3 141.7 144.0 144.4 144.3 1.3.17.3 Fibre optic cables for data transmission or live transmission of images 0.133 118.6 121.0 114.0 114.8 114.5 1.3.17.4 Other electronic and Electric wires and Cables 0.428 154.4 155.8 157.7 158.0 158.2 1.3.17.5 Wiring devices, Electric lighting & display equipment 0.263 118.4 119.5 117.8 117.8 118.5 1.3.17.6 Domestic appliances 0.366 131.8 132.0 130.0 130.0 130.1 1.3.17.7 Other electrical equipment 0.206 123.4 122.2 125.0 125.3 126.0 1.3.18 MANUFACTURE OF MACHINERY AND EQUIPMENT 4.789 130.8 130.8 131.6 131.8 132.3 1.3.18.1 Engines and Turbines, Except aircraft, Vehicle and Two wheeler engines 0.638 132.8 132.4 134.6 134.3 136.6 1.3.18.2 Fluid power equipment 0.162 134.5 133.9 135.2 134.6 134.4 1.3.18.3 Other pumps, Compressors, Taps and Valves 0.552 118.5 118.2 118.8 119.5 119.5 1.3.18.4 Bearings, Gears, Gearing and Driving elements 0.340 128.5 129.0 129.7 128.9 130.7 1.3.18.5 Ovens, Furnaces and Furnace burners 0.008 86.6 86.6 87.2 88.1 87.9 1.3.18.6 Lifting and Handling equipment 0.285 130.0 130.3 130.7 131.1 131.0 RBI Bulletin July 2025 127CURRENT STATISTICS No. 21: Wholesale Price Index (Concld.) (Base: 2011-12 = 100) Commodities Weight 2024-25 2024 2025 Jun. Apr. May (P) Jun.(P) 1 2 3 4 5 6 1.3.18.7 Office machinery and Equipment 0.006 130.2 130.2 130.2 130.2 130.2 1.3.18.8 Other general-purpose machinery 0.437 145.3 148.4 142.9 144.8 143.8 1.3.18.9 Agricultural and Forestry machinery 0.833 145.5 145.0 146.7 146.8 146.8 1.3.18.10 Metal-forming machinery and Machine tools 0.224 123.2 122.4 126.2 126.0 126.2 1.3.18.11 Machinery for mining, Quarrying and Construction 0.371 89.8 89.4 92.3 92.4 92.9 1.3.18.12 Machinery for food, Beverage and Tobacco processing 0.228 126.1 125.8 127.0 126.3 126.3 1.3.18.13 Machinery for textile, Apparel and Leather production 0.192 141.4 136.3 139.2 139.0 139.6 1.3.18.14 Other special-purpose machinery 0.468 144.9 145.7 145.6 145.8 146.9 1.3.18.15 Renewable electricity generating equipment 0.046 69.2 69.6 69.0 69.2 69.4 1.3.19 MANUFACTURE OF MOTOR VEHICLES, TRAILERS AND SEMI-TRAILERS 4.969 129.9 130.0 130.4 130.5 130.5 1.3.19.1 Motor vehicles 2.600 130.6 130.8 131.0 131.0 131.0 1.3.19.2 Parts and Accessories for motor vehicles 2.368 129.1 129.2 129.8 129.9 130.0 1.3.20 MANUFACTURE OF OTHER TRANSPORT EQUIPMENT 1.648 145.2 143.8 149.4 149.6 150.4 1.3.20.1 Building of ships and Floating structures 0.117 180.5 177.9 190.6 190.7 190.7 1.3.20.2 Railway locomotives and Rolling stock 0.110 108.9 108.3 109.3 109.7 109.8 1.3.20.3 Motor cycles 1.302 146.0 144.4 150.3 150.3 151.3 1.3.20.4 Bicycles and Invalid carriages 0.117 134.9 135.7 136.2 136.7 137.1 1.3.20.5 Other transport equipment 0.002 163.2 161.5 165.1 165.9 165.8 1.3.21 MANUFACTURE OF FURNITURE 0.727 160.3 157.5 163.1 163.4 163.8 1.3.21.1 Furniture 0.727 160.3 157.5 163.1 163.4 163.8 1.3.22 OTHER MANUFACTURING 1.064 183.8 177.9 209.1 219.3 224.3 1.3.22.1 Jewellery and Related articles 0.996 185.4 179.1 212.3 223.2 228.6 1.3.22.2 Musical instruments 0.001 201.9 201.9 201.4 202.1 204.3 1.3.22.3 Sports goods 0.012 164.9 161.7 170.4 171.0 171.4 1.3.22.4 Games and Toys 0.005 163.1 161.7 164.2 164.3 162.6 1.3.22.5 Medical and Dental instruments and Supplies 0.049 158.6 158.6 158.6 158.6 157.6 2 FOOD INDEX 24.378 192.9 190.7 190.7 189.5 190.2 Source: Office of the Economic Adviser, Ministry of Commerce and Industry, Government of India. 128 RBI Bulletin July 2025CURRENT STATISTICS No. 22: Index of Industrial Production (Base:2011-12=100) Industry Weight 2023-24 2024-25 April-May May 2024-25 2025-26 2024 2025 1 2 3 4 5 6 7 General Index 100.00 146.7 152.6 151.4 154.2 154.7 156.6 1 Sectoral Classification 1.1 Mining 14.37 128.9 132.8 133.7 133.5 136.5 136.3 1.2 Manufacturing 77.63 144.7 150.6 147.5 151.7 150.4 154.3 1.3 Electricity 7.99 198.3 208.6 220.7 215.9 229.3 216.0 2 Use-Based Classification 2.1 Primary Goods 34.05 147.7 153.5 156.6 154.9 160.9 157.9 2.2 Capital Goods 8.22 106.6 112.6 100.2 114.2 105.3 120.1 2.3 Intermediate Goods 17.22 157.3 164.0 160.1 166.8 162.4 168.1 2.4 Infrastructure/ Construction Goods 12.34 176.3 188.2 185.3 195.5 186.3 198.1 2.5 Consumer Durables 12.84 118.6 128.0 124.9 128.1 130.2 129.3 2.6 Consumer Non-Durables 15.33 153.7 151.4 152.5 148.6 154.0 150.3 Source : Central Statistics Office, Ministry of Statistics and Programme Implementation, Government of India. Government Accounts and Treasury Bills No. 23: Union Government Accounts at a Glance (₹ Crore) Financial Year April – May 2025-26 Percentage to Budget Item (Budget 2025-26 2024-25 Estimates (Actuals) (Actuals) Estimates) 2025-26 2024-25 1 2 3 4 5 1 Revenue Receipts 3420409 707739 570758 20.7 18.2 1.1 Tax Revenue (Net) 2837409 350862 319036 12.4 12.3 1.2 Non-Tax Revenue 583000 356877 251722 61.2 46.1 2 Non Debt Capital Receipt 76000 25224 2087 33.2 2.7 2.1 Recovery of Loans 29000 2606 2083 9.0 7.4 2.2 Other Receipts 47000 22618 4 48.1 0.0 3 Total Receipts (excluding borrowings) (1+2) 3496409 732963 572845 21.0 17.9 4 Revenue Expenditure 3944255 524772 479835 13.3 12.9 of which : 4.1 Interest Payments 1276338 147788 123810 11.6 10.6 5 Capital Expenditure 1121090 221354 143625 19.7 12.9 6 Total Expenditure (4+5) 5065345 746126 623460 14.7 12.9 7 Revenue Deficit (4-1) 523846 -182967 -90923 -34.9 -15.7 8 Fiscal Deficit (6-3) 1568936 13163 50615 0.8 3.1 9 Gross Primary Deficit (8-4.1) 292598 -134625 -73195 -46.0 -16.3 Source: Controller General of Accounts (CGA), Ministry of Finance, Government of India and Union Budget 2025-26. RBI Bulletin July 2025 129CURRENT STATISTICS No. 24: Treasury Bills – Ownership Pattern (₹ Crore) 2024-25 2024 2025 Item May 31 Apr. 25 May 2 May 9 May 16 May 23 May 30 1 2 3 4 5 6 7 8 1 91-day 1.1 Banks 26554 7219 13756 15165 21094 20448 21845 22722 1.2 Primary Dealers 25258 28830 23981 30222 23527 28838 34187 36058 1.3 State Governments 40315 37927 43217 67479 62779 62391 64691 62591 1.4 Others 115688 110051 118563 107913 105679 98014 101268 92319 2 182-day 2.1 Banks 44887 66301 43713 45664 50838 49483 53966 50567 2.2 Primary Dealers 62218 69388 66918 66469 65448 64497 59786 61807 2.3 State Governments 11078 9842 8932 9688 9688 9188 10688 11688 2.4 Others 104994 124315 96669 94867 89714 91019 89848 90226 3 364-day 3.1 Banks 72304 96254 67854 67424 70984 72339 71496 69501 3.2 Primary Dealers 86939 152028 85280 85297 77102 72934 74280 73306 3.3 State Governments 37389 41131 45879 42833 45600 46263 46232 46344 3.4 Others 162757 159718 156866 154279 155914 155727 156223 160193 4 14-day Intermediate 4.1 Banks 4.2 Primary Dealers 4.3 State Governments 188072 180187 187551 115869 97920 132809 146825 134728 4.4 Others 572 1700 1005 562 419 1194 879 2166 Total Treasury Bills (Excluding 14 day 790381 903004 771628 787300 778368 771142 784511 777323 Intermediate T Bills) # # 14D intermediate T-Bills are non-marketable unlike 91D, 182D and 364D T-Bills. These bills are ‘intermediate’ by nature as these are liquidated to replenish shortfall in the daily minimum cash balances of State Governments. Note: Primary Dealers (PDs) include banks undertaking PD business. No. 25: Auctions of Treasury Bills (Amount in ₹ Crore) Date of Notified Bids Received Bids Accepted Total Cut- Implicit Yield Auction Amount Total Face Value Total Face Value Issue off at Cut-off Price Number Number (6+7) Price (per cent) Competitive Non- Competitive Non- ( ₹ ) Competitive Competitive 1 2 3 4 5 6 7 8 9 10 91-day Treasury Bills 2025-26 Apr. 30 9000 75 21082 27123 32 8977 27123 36100 98.55 5.9036 May 7 9000 74 36730 1827 15 8973 1827 10800 98.56 5.8792 May 14 9000 128 46307 1024 5 8976 1024 10000 98.57 5.8392 May 21 9000 141 62922 3333 35 8967 3333 12300 98.60 5.7124 May 28 9000 102 30939 2819 37 8981 2819 11800 98.62 5.6200 182-day Treasury Bills 2025-26 Apr. 30 5000 82 19717 1723 18 4977 1723 6700 97.13 5.9258 May 7 5000 64 23046 1020 4 4980 1020 6000 97.15 5.8797 May 14 5000 86 27663 1019 9 4981 1019 6000 97.17 5.8406 May 21 5000 82 36329 2512 11 4988 2512 7500 97.23 5.7101 May 28 5000 73 24766 2018 17 4982 2018 7000 97.27 5.6287 364-day Treasury Bills 2025-26 Apr. 30 5000 92 23359 187 30 4978 187 5165 94.43 5.9146 May 7 5000 93 33225 3333 4 4964 3333 8296 94.46 5.8796 May 14 5000 102 32997 727 5 4984 727 5711 94.50 5.8416 May 21 5000 114 36415 111 26 4977 111 5088 94.59 5.7298 May 28 5000 110 29969 175 18 4948 175 5123 94.69 5.6288 130 RBI Bulletin July 2025CURRENT STATISTICS Financial Markets No. 26: Daily Call Money Rates (Per cent per annum) Range of Rates Weighted Average Rates As on Borrowings/ Lendings Borrowings/ Lendings 1 2 May 02 ,2025 4.95-6.00 5.86 May 03 ,2025 5.25-5.95 5.55 May 05 ,2025 4.95-6.16 5.89 May 06 ,2025 4.95-5.95 5.84 May 07 ,2025 4.90-5.95 5.83 May 08 ,2025 4.90-5.90 5.82 May 09 ,2025 4.90-6.00 5.84 May 13 ,2025 4.90-5.90 5.83 May 14 ,2025 4.90-5.90 5.84 May 15 ,2025 4.90-5.90 5.83 May 16 ,2025 4.90-5.90 5.81 May 17 ,2025 5.20-5.90 5.42 May 19 ,2025 4.85-5.90 5.79 May 20 ,2025 4.85-5.85 5.79 May 21 ,2025 4.85-5.90 5.80 May 22 ,2025 4.85-5.90 5.85 May 23 ,2025 4.85-5.90 5.85 May 26 ,2025 4.85-5.85 5.81 May 27 ,2025 4.85-5.85 5.80 May 28 ,2025 4.85-5.85 5.79 May 29 ,2025 4.85-5.85 5.78 May 30 ,2025 4.85-6.00 5.83 May 31 ,2025 5.25-5.90 5.52 June 02 ,2025 4.85-5.85 5.79 June 03 ,2025 4.85-6.65 5.77 June 04 ,2025 4.85-5.85 5.75 June 05 ,2025 4.85-5.85 5.75 June 06 ,2025 4.85-5.50 5.42 June 09 ,2025 4.75-5.40 5.30 June 10 ,2025 4.75-5.35 5.30 June 11 ,2025 4.80-5.35 5.30 June 12 ,2025 4.35-5.40 5.29 June 13 ,2025 4.75-5.36 5.31 Note: Includes Notice Money. RBI Bulletin July 2025 131CURRENT STATISTICS No. 27: Certificates of Deposit 2024 2025 Item May 31 Apr. 18 May 2 May 16 May 30 Jun. 13 Jun. 27 1 2 3 4 5 6 7 1 Amount Outstanding (₹ Crore) 369203.22 518759.57 512999.59 511818.07 513762.66 483064.43 517439.00 1.1 Issued during the fortnight (₹ Crore) 44822.51 7213.32 9185.58 48202.31 38388.15 40924.08 85607.74 2 Rate of Interest (per cent) 7.00-7.49 6.43-7.37 6.35-7.22 6.21-7.24 6.01-7.37 5.65-7.04 5.77-6.63 No. 28: Commercial Paper Item 2024 2025 May 31 Apr. 15 Apr. 30 May 15 May 31 Jun. 15 Jun. 30 1 2 3 4 5 6 7 1 Amount Outstanding (₹ Crore) 403970.00 521558.10 545586.95 541591.10 553874.25 549258.30 500000.60 1.1 Reported during the fortnight (₹ Crore) 80921.75 91006.40 72418.90 48973.55 81053.80 102447.00 58021.75 2 Rate of Interest (per cent) 7.05-13.92 6.31-11.65 6.26-13.00 6.44-10.14 5.97-12.23 5.67-11.63 5.71-13.84 No. 29: Average Daily Turnover in Select Financial Markets (₹ Crore) Item 2024-25 2024 2025 May 31 Apr. 25 May 02 May 09 May 16 May 23 May 30 1 2 3 4 5 6 7 8 1 Call Money 18990 19446 26638 26810 28824 27040 29606 26805 2 Notice Money 2506 4362 181 8517 469 7718 231 6439 3 Term Money 941 1154 1900 1240 1199 1549 2302 1687 4 Triparty Repo 692068 720037 706111 816698 658386 761526 666649 824530 5 Market Repo 578912 671501 626465 769154 687084 784092 607184 719036 6 Repo in Corporate Bond 5212 3762 6915 6641 6372 6781 6682 6308 7 Forex (US $ million) 131877 113440 136963 171583 134858 142220 125401 140910 8 Govt. of India Dated Securities 56065 96496 201467 173909 188659 196335 153621 131774 9 State Govt. Securities 3971 3779 11158 10607 9746 7903 12737 7015 10 Treasury Bills 10.1 91-Day 2514 2928 5042 5075 6347 3121 4847 6333 10.2 182-Day 2218 5660 3911 1130 3386 4511 6110 2619 10.3 364-Day 1854 1838 4433 3190 3149 5144 4542 3368 10.4 Cash Management Bills 0 0 0 0 0 0 0 11 Total Govt. Securities (8+9+10) 66622 110701 226012 193911 211288 217014 181858 151109 11.1 RBI 1715 32 12079 5013 10337 13080 4324 54 132 RBI Bulletin July 2025CURRENT STATISTICS No. 30: New Capital Issues by Non-Government Public Limited Companies (Amount in ₹ Crore) 2024-25 2024-25 (Apr.-May) 2025-26 (Apr.-May) * May 2024 May 2025 * Security & Type of Issue No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount Issues Issues Issues Issues Issues 1 2 3 4 5 6 7 8 9 10 1 Equity Shares 464 210190 74 37709 33 7191 39 12338 19 6756 1.1 Public 322 190478 53 33861 21 5939 26 10133 13 5684 1.2 Rights 142 19712 21 3848 12 1253 13 2205 6 1073 2 Public Issue of 43 8149 7 1894 8 1352 3 1207 3 576 Bonds/ Debentures 3 Total (1+2) 507 218339 81 39603 41 8544 42 13545 22 7332 3.1 Public 365 198627 60 35754 29 7291 29 11340 16 6259 3.2 Rights 142 19712 21 3848 12 1253 13 2205 6 1073 Notes : 1. Since April 2020, monthly data on equity issues is compiled on the basis of their listing date. 2. Figures in the columns might not add up to the total due to rounding off numbers. 3. The table covers only public and rights issuances of equity and debt. It does not include data on private placement of debt, qualified institutional placements and preferential allotments. Source : Securities and Exchange Board of India. * : Data is Provisional RBI Bulletin July 2025 133CURRENT STATISTICS External Sector No. 31: Foreign Trade 2024 2025 2024-25 Item Unit May Jan. Feb. Mar. Apr. May 1 2 3 4 5 6 7 1 Exports ₹ Crore 3701070 330163 313532 320532 363598 328041 329602 US $ Million 437416 39591 36345 36820 41968 38340 38690 1.1 Oil ₹ Crore 534917 67542 29943 49785 42467 61437 47819 US $ Million 63341 8099 3471 5719 4902 7180 5613 1.2 Non-oil ₹ Crore 3166153 262621 283588 270747 321131 266604 281783 US $ Million 374075 31492 32874 31101 37066 31159 33077 2 Imports ₹ Crore 6089909 514327 512680 443663 550211 555381 516341 US $ Million 720241 61675 59430 50964 63507 64910 60611 2.1 Oil ₹ Crore 1570226 166553 115941 103528 164684 177233 125666 US $ Million 185779 19972 13440 11892 19008 20714 14751 2.2 Non-oil ₹ Crore 4519683 347774 396739 340135 385527 378149 390675 US $ Million 534462 41703 45990 39071 44499 44196 45859 3 Trade Balance ₹ Crore -2388839 -184164 -199148 -123131 -186613 -227340 -186739 US $ Million -282825 -22084 -23085 -14144 -21539 -26570 -21920 3.1 Oil ₹ Crore -1035309 -99012 -85998 -53743 -122217 -115796 -77847 US $ Million -122438 -11873 -9969 -6173 -14107 -13534 -9138 3.2 Non-oil ₹ Crore -1353530 -85153 -113150 -69388 -64395 -111545 -108893 US $ Million -160387 -10211 -13117 -7971 -7433 -13037 -12782 Note: Data in the table are provisional. Source: Directorate General of Commercial Intelligence and Statistics. No. 32: Foreign Exchange Reserves 2024 2025 Item Unit Jul. 05 May 23 May 30 Jun. 06 Jun. 13 Jun. 20 Jun. 27 1 2 3 4 5 6 7 1 Total Reserves ₹ Crore 5486788 5902926 5916602 5968103 6017974 6043697 6007745 US $ Million 657155 692721 691485 696656 698950 697935 702784 1.1 Foreign Currency Assets ₹ Crore 4818462 4994767 4998795 5034543 5074967 5100971 5084809 US $ Million 577110 586167 584215 587687 589426 589069 594823 1.2 Gold ₹ Crore 479517 712210 721351 735779 743180 742482 722374 US $ Million 57432 83582 84305 85888 86316 85743 84504 Volume (Metric Tonnes) 841.51 879.58 879.58 879.58 879.58 879.58 879.98 1.3 SDRs SDRs Million 13699 13707 13707 13707 13707 13707 13707 ₹ Crore 150585 158241 158885 159953 161493 161685 160963 US $ Million 18036 18571 18569 18672 18756 18672 18830 1.4 Reserve Tranche Position in IMF ₹ Crore 38222 37708 37571 37828 38334 38559 39598 US $ Million 4578 4401 4395 4409 4452 4452 4628 * Difference, if any, is due to rounding off. Note: Exclude investment in foreign currency denominated bonds issued by IIFC (UK), SDRs transferred by Government of India to RBI, foreign currency received under SAARC and ACU currency swap arrangements and RBI’s contribution to funding of Nexus Global Payments. Foreign currency assets in US dollar take into account appreciation/depreciation of non- US currencies (such as Euro, Sterling, Yen and Australian Dollar) held in reserves. Foreign exchange holdings are converted into rupees at rupee-US dollar RBI holding rates. No. 33: Non-Resident Deposits (US $ Million) Scheme Outstanding Flows 2024 2025 2024-25 2025-26 2024-25 May Apr. May (P) Apr.-May Apr.-May (P) 1 2 3 4 5 6 1 NRI Deposits 164677 154784 165432 166718 2790 1884 1.1 FCNR(B) 32809 26853 33081 33250 1120 441 1.2 NR(E)RA 100733 99895 101112 101862 1181 1009 1.3 NRO 31135 28037 31239 31606 490 434 P: Provisional. 134 RBI Bulletin July 2025CURRENT STATISTICS No. 34: Foreign Investment Inflows (US $ Million) 2024-25 2025-26 (P) 2024 (P) 2025 (P) Item 2024-25 Apr.-May Apr.-May May Apr. May 1 2 3 4 5 6 1.1 Net Foreign Direct Investment (1.1.1-1.1.2) 959 3982 3894 2203 3859 35 1.1.1 Direct Investment to India (1.1.1.1-1.1.1.2) 29130 7049 9235 3996 7076 2159 1.1.1.1 Gross Inflows/Gross Investments 80615 15163 15917 8053 8743 7173 1.1.1.1.1 Equity 50993 10912 11865 5928 6634 5232 1.1.1.1.1.1 Government (SIA/FIPB) 2208 91 357 80 297 60 1.1.1.1.1.2 RBI 34686 8519 8191 3787 4696 3494 1.1.1.1.1.3 Acquisition of shares 13124 2153 3169 1986 1566 1603 1.1.1.1.1.4 Equity capital of unincorporated bodies 975 149 149 75 75 75 1.1.1.1.2 Reinvested earnings 22759 3483 3483 1742 1742 1742 1.1.1.1.3 Other capital 6863 767 568 384 368 200 1.1.1.2 Repatriation/Disinvestment 51486 8114 6682 4057 1668 5014 1.1.1.2.1 Equity 49525 7782 6367 3891 1513 4855 1.1.1.2.2 Other capital 1960 332 314 166 155 159 1.1.2 Foreign Direct Investment by India 28171 3066 5341 1793 3217 2124 (1.1.2.1+1.1.2.2+1.1.2.3-1.1.2.4) 1.1.2.1 Equity capital 16945 1883 2469 1168 1815 654 1.1.2.2 Reinvested Earnings 6846 1141 1141 571 571 571 1.1.2.3 Other Capital 7955 807 1916 437 949 967 1.1.2.4 Repatriation/Disinvestment 3575 765 185 382 118 67 1.2 Net Portfolio Investment (1.2.1+1.2.2+1.2.3-1.2.4) 3564 -4504 -1543 -1821 -3097 1554 1.2.1 GDRs/ADRs - - - - - - 1.2.2 FIIs 3283 -4536 -739 -1836 -2440 1700 1.2.3 Offshore funds and others - - - - - - 1.2.4 Portfolio investment by India -281 -32 804 -16 658 146 1 Foreign Investment Inflows 4523 -522 2351 382 762 1590 P: Provisional No. 35: Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals (US $ Million) 2024 2025 Item 2024-25 May Mar. Apr. May 1 2 3 4 5 1 Outward Remittances under the LRS 29563.12 2420.58 2547.57 2481.41 2313.16 1.1 Deposit 705.26 52.98 173.17 94.15 54.65 1.2 Purchase of immovable property 322.82 21.69 45.10 44.69 41.69 1.3 Investment in equity/debt 1698.94 98.86 306.39 203.44 104.94 1.4 Gift 2938.69 271.93 299.59 290.89 233.30 1.5 Donations 11.81 0.58 2.20 1.57 1.98 1.6 Travel 16964.57 1401.16 1125.55 1270.44 1389.23 1.7 Maintenance of close relatives 3722.03 320.80 421.47 397.97 322.54 1.8 Medical Treatment 81.19 7.66 3.57 5.08 6.72 1.9 Studies Abroad 2918.91 210.99 160.03 163.56 149.78 1.10 Others 198.90 33.94 10.51 9.61 8.32 RBI Bulletin July 2025 135CURRENT STATISTICS No. 36: Indices of Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) of the Indian Rupee 2024 2025 2023-24 2024-25 Jun May Jun Item 1 2 3 4 5 40-Currency Basket (Base: 2015-16=100) 1 Trade-Weighted 1.1 NEER 90.75 91.05 92.13 89.14 87.73 1.2 REER 103.71 105.28 106.29 101.12 100.36 2 Export-Weighted 2.1 NEER 93.13 93.53 94.60 91.98 90.55 2.2 REER 101.22 102.34 103.40 98.32 97.57 6-Currency Basket (Trade-weighted) 1 Base : 2015-16 =100 1.1 NEER 83.62 82.39 83.67 80.29 79.06 1.2 REER 101.66 102.74 103.52 99.19 98.24 2 Base : 2022-23 =100 2.1 NEER 97.31 95.89 97.37 93.44 92.01 2.2 REER 99.86 100.92 101.69 97.44 96.50 Note: Data for 2024-25 and 2025-26 so far is provisional. 136 RBI Bulletin July 2025CURRENT STATISTICS No. 37: External Commercial Borrowings (ECBs) – Registrations (Amount in US $ Million) Item 2024-25 2024 2025 May Apr. May 1 2 3 4 1 Automatic Route 1.1 Number 1328 108 119 100 1.2 Amount 47800 3669 1907 2739 2 Approval Route 2.1 Number 51 2 3 0 2.2 Amount 13384 343 1010 0 3 Total (1+2) 3.1 Number 1379 110 122 100 3.2 Amount 61184 4012 2917 2739 4 Weighted Average Maturity (in years) 5.05 4.90 4.20 4.80 5 Interest Rate (per cent) 5.1 Weighted Average Margin over alternative reference rate (ARR) for Floating Rate Loans@ 1.48 2.05 1.41 1.46 5.2 Interest rate range for Fixed Rate Loans 0.00-11.67 0.00-11.67 0.00-10.25 0.00-10.00 Borrower Category I. Corporate Manufacturing 13900 497 817 1201 II. Corporate-Infrastructure 15462 1366 48 717 a.) Transport 614 0 0 0 b.) Energy 6900 434 0 0 c.) Water and Sanitation 28 0 0 0 d.) Communication 13 0 0 0 e.) Social and Commercial Infrastructure 184 56 45 1 f.) Exploration,Mining and Refinery 5356 0 0 305 g.) Other Sub-Sectors 2367 876 3 411 III. Corporate Service-Sector 3226 138 337 242 IV. Other Entities 1026 0 8 0 a.) units in SEZ 26 0 8 0 b.) SIDBI 0 0 0 0 c.) Exim Bank 1000 0 0 0 V. Banks 0 0 0 0 VI. Financial Institution (Other than NBFC ) 0 0 0 0 VII. NBFCs 26318 1424 1530 566 a). NBFC- IFC/AFC 12389 555 1159 0 b). NBFC-MFI 459 52 0 86 c). NBFC-Others 13470 817 371 480 VIII. Non-Government Organization (NGO) 0 0 0 0 IX. Micro Finance Institution (MFI) 0 0 0 0 X. Others 1252 587 177 13 Note: Based on applications for ECB/Foreign Currency Convertible Bonds (FCCBs) which have been allotted loan registration number during the period. @ With effect from July 01, 2023, the benchmark rate is changed to Alternative Reference Rate (ARR). RBI Bulletin July 2025 137CURRENT STATISTICS No. 38: India’s Overall Balance of Payments (US$ Million) Jan-Mar 2024 Jan-Mar 2025 (P) Credit Debit Net Credit Debit Net Item 1 2 3 4 5 6 Overall Balance Of Payments (1+2+3) 502221 471468 30754 521618 512829 8789 1 Current Account (1.1+ 1.2) 253534 248967 4567 264919 251469 13451 1.1 Merchandise 121626 173645 -52019 116283 175762 -59478 1.2 Invisibles (1.2.1+1.2.2+1.2.3) 131908 75322 56586 148636 75707 72929 1.2.1 Services 89356 46672 42684 102019 48711 53308 1.2.1.1 Travel 9961 8063 1898 9097 7934 1162 1.2.1.2 Transportation 7771 7829 -58 8151 8385 -234 1.2.1.3 Insurance 927 650 277 886 762 124 1.2.1.4 G.n.i.e. 129 315 -186 165 330 -165 1.2.1.5 Miscellaneous 70568 29814 40753 83720 31299 52421 1.2.1.5.1 Software Services 41551 4908 36643 46917 5434 41483 1.2.1.5.2 Business Services 22620 16388 6232 29432 16221 13212 1.2.1.5.3 Financial Services 1599 1269 330 1989 795 1193 1.2.1.5.4 Communication Services 498 506 -7 731 533 198 1.2.2 Transfers 32097 3378 28719 34717 3214 31504 1.2.2.1 Official 51 282 -231 31 376 -345 1.2.2.2 Private 32046 3096 28950 34686 2838 31848 1.2.3 Income 10455 25272 -14817 11900 23782 -11882 1.2.3.1 Investment Income 8523 24233 -15710 9873 22750 -12877 1.2.3.2 Compensation of Employees 1932 1039 893 2027 1032 995 2 Capital Account (2.1+2.2+2.3+2.4+2.5) 248044 222501 25543 255786 261361 -5574 2.1 Foreign Investment (2.1.1+2.1.2) 159056 145366 13691 144464 149956 -5492 2.1.1 Foreign Direct Investment 20179 17881 2299 18494 18127 366 2.1.1.1 In India 19474 11411 8063 17527 7474 10053 2.1.1.1.1 Equity 12762 10934 1829 9610 7199 2411 2.1.1.1.2 Reinvested Earnings 5332 5332 6165 6165 2.1.1.1.3 Other Capital 1379 477 902 1751 275 1476 2.1.1.2 Abroad 706 6470 -5764 967 10653 -9686 2.1.1.2.1 Equity 706 3208 -2503 967 6321 -5354 2.1.1.2.2 Reinvested Earnings 0 1446 -1446 0 1712 -1712 2.1.1.2.3 Other Capital 0 1815 -1815 0 2620 -2620 2.1.2 Portfolio Investment 138877 127485 11392 125970 131829 -5859 2.1.2.1 In India 138217 126638 11579 124923 130917 -5995 2.1.2.1.1 FIIs 138217 126638 11579 124923 130917 -5995 2.1.2.1.1.1 Equity 120784 119426 1358 101683 115225 -13541 2.1.2.1.1.2 Debt 17432 7212 10221 23239 15693 7547 2.1.2.1.2 ADR/GDRs 0 0 0 0 2.1.2.2 Abroad 660 847 -187 1048 912 136 2.2 Loans (2.2.1+2.2.2+2.2.3) 31787 27899 3888 56056 50511 5544 2.2.1 External Assistance 3587 1562 2025 3712 1641 2071 2.2.1.1 By India 8 31 -23 6 25 -19 2.2.1.2 To India 3579 1531 2048 3706 1616 2090 2.2.2 Commercial Borrowings 15121 13472 1649 38786 30910 7876 2.2.2.1 By India 3401 4308 -907 23141 22668 473 2.2.2.2 To India 11719 9164 2555 15645 8242 7403 2.2.3 Short Term to India 13079 12865 214 13558 17961 -4403 2.2.3.1 Buyers' credit & Suppliers' Credit >180 days 12000 12865 -865 13558 16205 -2647 2.2.3.2 Suppliers' Credit up to 180 days 1079 0 1079 0 1755 -1755 2.3 Banking Capital (2.3.1+2.3.2) 40722 33811 6911 33573 42550 -8977 2.3.1 Commercial Banks 39768 33811 5957 33573 42331 -8758 2.3.1.1 Assets 9220 12330 -3110 6486 17652 -11166 2.3.1.2 Liabilities 30548 21481 9067 27087 24678 2408 2.3.1.2.1 Non-Resident Deposits 26041 20678 5363 26288 23458 2830 2.3.2 Others 955 0 955 0 219 -219 2.4 Rupee Debt Service 7 -7 7 -7 2.5 Other Capital 16479 15418 1060 21694 18336 3358 3 Errors & Omissions 643 0 643 912 0 912 4 Monetary Movements (4.1+ 4.2) 0 30754 -30754 0 8789 -8789 4.1 I.M.F. 0 0 0 0 0 0 4.2 Foreign Exchange Reserves (Increase - / Decrease +) 30754 -30754 8789 -8789 Note: P: Preliminary. 138 RBI Bulletin July 2025CURRENT STATISTICS No. 39: India’s Overall Balance of Payments (₹ Crore) Jan-Mar 2024 Jan-Mar 2025 (P) Credit Debit Net Credit Debit Net Item 1 2 3 4 5 6 Overall Balance Of Payments (1+2+3) 4169814 3914475 255339 4519960 4443804 76155 1 Current Account (1.1+ 1.2) 2105027 2067106 37921 2295597 2179044 116553 1.1 Merchandise 1009832 1441729 -431897 1007628 1523023 -515395 1.2 Invisibles (1.2.1+1.2.2+1.2.3) 1095194 625377 469817 1287969 656021 631948 1.2.1 Services 741899 387502 354397 884018 422093 461925 1.2.1.1 Travel 82705 66948 15758 78826 68754 10072 1.2.1.2 Transportation 64519 65002 -483 70629 72660 -2031 1.2.1.3 Insurance 7698 5395 2303 7675 6603 1071 1.2.1.4 G.n.i.e. 1073 2616 -1543 1432 2860 -1429 1.2.1.5 Miscellaneous 585904 247541 338363 725457 271215 454242 1.2.1.5.1 Software Services 344986 40752 304234 406549 47084 359465 1.2.1.5.2 Business Services 187807 136067 51740 255039 140555 114484 1.2.1.5.3 Financial Services 13280 10537 2743 17232 6892 10339 1.2.1.5.4 Communication Services 4136 4197 -61 6333 4618 1715 1.2.2 Transfers 266491 28049 238442 300834 27848 272987 1.2.2.1 Official 423 2344 -1921 273 3259 -2986 1.2.2.2 Private 266068 25705 240363 300561 24588 275973 1.2.3 Income 86804 209826 -123022 103117 206080 -102963 1.2.3.1 Investment Income 70763 201199 -130436 85554 197135 -111581 1.2.3.2 Compensation of Employees 16041 8627 7414 17563 8945 8618 2 Capital Account (2.1+2.2+2.3+2.4+2.5) 2059444 1847368 212076 2216458 2264761 -48303 2.1 Foreign Investment (2.1.1+2.1.2) 1320601 1206932 113669 1251821 1299413 -47592 2.1.1 Foreign Direct Investment 167544 148458 19086 160253 157078 3175 2.1.1.1 In India 161684 94741 66943 151875 64767 87108 2.1.1.1.1 Equity 105963 90780 15183 83277 62383 20894 2.1.1.1.2 Reinvested Earnings 44274 0 44274 53422 0 53422 2.1.1.1.3 Other Capital 11447 3960 7487 15176 2384 12792 2.1.1.2 Abroad 5860 53718 -47858 8378 92311 -83933 2.1.1.2.1 Equity 5860 26638 -20778 8378 54774 -46396 2.1.1.2.2 Reinvested Earnings 0 12009 -12009 0 14831 -14831 2.1.1.2.3 Other Capital 0 15071 -15071 0 22706 -22706 2.1.2 Portfolio Investment 1153057 1058474 94583 1091568 1142335 -50767 2.1.2.1 In India 1147577 1051439 96139 1082489 1134435 -51945 2.1.2.1.1 FIIs 1147577 1051439 96139 1082489 1134435 -51945 2.1.2.1.1.1 Equity 1002841 991563 11278 881113 998454 -117341 2.1.2.1.1.2 Debt 144736 59875 84861 201376 135981 65395 2.1.2.1.2 ADR/GDRs 0 0 0 0 0 0 2.1.2.2 Abroad 5480 7035 -1555 9079 7900 1178 2.2 Loans (2.2.1+2.2.2+2.2.3) 263920 231641 32279 485737 437694 48043 2.2.1 External Assistance 29784 12969 16816 32166 14220 17945 2.2.1.1 By India 66 255 -188 52 217 -166 2.2.1.2 To India 29718 12714 17004 32114 14003 18111 2.2.2 Commercial Borrowings 125543 111856 13688 336088 267839 68248 2.2.2.1 By India 28241 35769 -7528 200522 196420 4102 2.2.2.2 To India 97302 76086 21216 135565 71419 64146 2.2.3 Short Term to India 108592 106817 1775 117484 155634 -38150 2.2.3.1 Buyers' credit & Suppliers' Credit >180 days 99631 106817 -7185 117484 140424 -22940 2.2.3.2 Suppliers' Credit up to 180 days 8961 0 8961 0 15210 -15210 2.3 Banking Capital (2.3.1+2.3.2) 338106 280721 57384 290917 368705 -77788 2.3.1 Commercial Banks 330180 280721 49459 290917 366806 -75889 2.3.1.1 Assets 76548 102370 -25822 56203 152962 -96758 2.3.1.2 Liabilities 253632 178351 75281 234713 213844 20870 2.3.1.2.1 Non-Resident Deposits 216214 171683 44531 227792 203268 24524 2.3.2 Others 7926 0 7926 0 1899 -1899 2.4 Rupee Debt Service 0 60 -60 0 62 -62 2.5 Other Capital 136818 128013 8804 187982 158886 29096 3 Errors & Omissions 5343 0 5343 7905 0 7905 4 Monetary Movements (4.1+ 4.2) 0 255339 -255339 0 76155 -76155 4.1 I.M.F. 0 0 0 0 0 0 4.2 Foreign Exchange Reserves (Increase - / Decrease +) 0 255339 -255339 0 76155 -76155 Note: P: Preliminary. RBI Bulletin July 2025 139CURRENT STATISTICS No. 40: Standard Presentation of BoP in India as per BPM6 (US$ Million) Item Jan-Mar 2024 Jan-Mar 2025 (P) Credit Debit Net Credit Debit Net 1 2 3 4 5 6 1 Current Account (1.A+1.B+1.C) 253531 248945 4586 264919 251439 13480 1.A Goods and Services (1.A.a+1.A.b) 210982 220317 -9334 218302 224473 -6171 1.A.a Goods (1.A.a.1 to 1.A.a.3) 121626 173645 -52019 116283 175762 -59478 1.A.a.1 General merchandise on a BOP basis 121327 164054 -42727 116068 166261 -50193 1.A.a.2 Net exports of goods under merchanting 300 0 300 216 0 216 1.A.a.3 Nonmonetary gold 9591 -9591 9501 -9501 1.A.b Services (1.A.b.1 to 1.A.b.13) 89356 46672 42684 102019 48711 53308 1.A.b.1 Manufacturing services on physical inputs owned by others 352 18 335 280 46 235 1.A.b.2 Maintenance and repair services n.i.e. 55 456 -401 98 292 -193 1.A.b.3 Transport 7771 7829 -58 8151 8385 -234 1.A.b.4 Travel 9961 8063 1898 9097 7934 1162 1.A.b.5 Construction 1658 791 867 1553 820 733 1.A.b.6 Insurance and pension services 927 650 277 886 762 124 1.A.b.7 Financial services 1599 1269 330 1989 795 1193 1.A.b.8 Charges for the use of intellectual property n.i.e. 319 3365 -3046 376 4358 -3981 1.A.b.9 Telecommunications, computer, and information services 42137 5707 36430 47738 6309 41430 1.A.b.10 Other business services 22620 16388 6232 29432 16221 13212 1.A.b.11 Personal, cultural, and recreational services 1253 1496 -243 1270 1470 -199 1.A.b.12 Government goods and services n.i.e. 129 315 -186 165 330 -165 1.A.b.13 Others n.i.e. 575 324 251 983 990 -7 1.B Primary Income (1.B.1 to 1.B.3) 10455 25272 -14817 11900 23782 -11882 1.B.1 Compensation of employees 1932 1039 893 2027 1032 995 1.B.2 Investment income 6758 23555 -16797 7800 22296 -14497 1.B.2.1 Direct investment 2518 13929 -11411 2743 13132 -10389 1.B.2.2 Portfolio investment 94 2383 -2289 110 1937 -1827 1.B.2.3 Other investment 874 7015 -6141 846 7048 -6203 1.B.2.4 Reserve assets 3272 229 3043 4101 179 3923 1.B.3 Other primary income 1765 678 1087 2074 454 1620 1.C Secondary Income (1.C.1+1.C.2) 32093 3356 28737 34717 3184 31532 1.C.1 Financial corporations, nonfinancial corporations, households, and NPISHs 32046 3096 28950 34686 2838 31848 1.C.1.1 Personal transfers (Current transfers between resident and/non-resident households) 31301 2324 28977 33936 2096 31839 1.C.1.2 Other current transfers 745 772 -27 750 741 9 1.C.2 General government 48 260 -212 31 347 -316 2 Capital Account (2.1+2.2) 182 138 44 198 279 -81 2.1 Gross acquisitions (DR.)/disposals (CR.) of non-produced nonfinancial assets 21 50 -30 16 112 -96 2.2 Capital transfers 161 87 74 182 166 16 3 Financial Account (3.1 to 3.5) 247865 253139 -5274 255589 269900 -14311 3.1 Direct Investment (3.1A+3.1B) 20179 17881 2299 18494 18127 366 3.1.A Direct Investment in India 19474 11411 8063 17527 7474 10053 3.1.A.1 Equity and investment fund shares 18095 10934 7161 15776 7199 8576 3.1.A.1.1 Equity other than reinvestment of earnings 12762 10934 1829 9610 7199 2411 3.1.A.1.2 Reinvestment of earnings 5332 5332 6165 6165 3.1.A.2 Debt instruments 1379 477 902 1751 275 1476 3.1.A.2.1 Direct investor in direct investment enterprises 1379 477 902 1751 275 1476 3.1.B Direct Investment by India 706 6470 -5764 967 10653 -9686 3.1.B.1 Equity and investment fund shares 706 4655 -3949 967 8033 -7066 3.1.B.1.1 Equity other than reinvestment of earnings 706 3208 -2503 967 6321 -5354 3.1.B.1.2 Reinvestment of earnings 1446 -1446 1712 -1712 3.1.B.2 Debt instruments 0 1815 -1815 0 2620 -2620 3.1.B.2.1 Direct investor in direct investment enterprises 1815 -1815 2620 -2620 3.2 Portfolio Investment 138877 127485 11392 125970 131829 -5859 3.2.A Portfolio Investment in India 138217 126638 11579 124923 130917 -5995 3.2.1 Equity and investment fund shares 120784 119426 1358 101683 115225 -13541 3.2.2 Debt securities 17432 7212 10221 23239 15693 7547 3.2.B Portfolio Investment by India 660 847 -187 1048 912 136 3.3 Financial derivatives (other than reserves) and employee stock options 6126 9280 -3154 4928 12389 -7461 3.4 Other investment 82683 67739 14944 106197 98766 7430 3.4.1 Other equity (ADRs/GDRs) 0 0 0 0 0 0 3.4.2 Currency and deposits 26996 20678 6318 26288 23677 2611 3.4.2.1 Central bank (Rupee Debt Movements; NRG) 955 0 955 0 219 -219 3.4.2.2 Deposit-taking corporations, except the central bank (NRI Deposits) 26041 20678 5363 26288 23458 2830 3.4.2.3 General government 0 0 3.4.2.4 Other sectors 0 0 3.4.3 Loans (External Assistance, ECBs and Banking Capital) 32434 28167 4267 49782 51423 -1641 3.4.3.A Loans to India 29025 23828 5197 26636 28731 -2095 3.4.3.B Loans by India 3409 4339 -929 23147 22693 454 3.4.4 Insurance, pension, and standardized guarantee schemes 54 85 -31 56 630 -574 3.4.5 Trade credit and advances 13079 12865 214 13558 17961 -4403 3.4.6 Other accounts receivable/payable - other 10120 5945 4175 16512 5076 11437 3.4.7 Special drawing rights 0 0 3.5 Reserve assets 0 30754 -30754 0 8789 -8789 3.5.1 Monetary gold 0 0 3.5.2 Special drawing rights n.a. 0 0 3.5.3 Reserve position in the IMF n.a. 0 0 3.5.4 Other reserve assets (Foreign Currency Assets) 0 30754 -30754 0 8789 -8789 4 Total assets/liabilities 247865 253139 -5274 255589 269900 -14311 4.1 Equity and investment fund shares 146425 145227 1198 124457 144387 -19929 4.2 Debt instruments 91320 71214 20107 114619 111649 2970 4.3 Other financial assets and liabilities 10120 36698 -26578 16512 13864 2648 5 Net errors and omissions 643 0 643 912 0 912 Note: P: Preliminary. 140 RBI Bulletin July 2025CURRENT STATISTICS No. 41: Standard Presentation of BoP in India as per BPM6 (₹ Crore) Jan-Mar 2024 Jan-Mar 2025 (P) Item Credit Debit Net Credit Debit Net 1 2 3 4 5 6 1 Current Account (1.A+1.B+1.C) 2104999 2066922 38077 2295593 2178790 116804 1.A Goods and Services (1.A.a+1.A.b) 1751732 1829231 -77500 1891646 1945116 -53470 1.A.a Goods (1.A.a.1 to 1.A.a.3) 1009832 1441729 -431897 1007628 1523023 -515395 1.A.a.1 General merchandise on a BOP basis 1007344 1362098 -354753 1005759 1440693 -434934 1.A.a.2 Net exports of goods under merchanting 2488 0 2488 1868 0 1868 1.A.a.3 Nonmonetary gold 0 79632 -79632 0 82330 -82330 1.A.b Services (1.A.b.1 to 1.A.b.13) 741899 387502 354397 884018 422093 461925 1.A.b.1 Manufacturing services on physical inputs owned by others 2923 146 2778 2429 397 2032 1.A.b.2 Maintenance and repair services n.i.e. 455 3786 -3331 852 2528 -1676 1.A.b.3 Transport 64519 65002 -483 70629 72660 -2031 1.A.b.4 Travel 82705 66948 15758 78826 68754 10072 1.A.b.5 Construction 13763 6567 7196 13459 7104 6355 1.A.b.6 Insurance and pension services 7698 5395 2303 7675 6603 1071 1.A.b.7 Financial services 13280 10537 2743 17232 6892 10339 1.A.b.8 Charges for the use of intellectual property n.i.e. 2648 27942 -25294 3261 37760 -34499 1.A.b.9 Telecommunications, computer, and information services 349851 47384 302467 413664 54665 358999 1.A.b.10 Other business services 187807 136067 51740 255039 140555 114484 1.A.b.11 Personal, cultural, and recreational services 10404 12421 -2016 11007 12735 -1729 1.A.b.12 Government goods and services n.i.e. 1073 2616 -1543 1432 2860 -1429 1.A.b.13 Others n.i.e. 4771 2691 2081 8514 8579 -64 1.B Primary Income (1.B.1 to 1.B.3) 86804 209826 -123022 103117 206080 -102963 1.B.1 Compensation of employees 16041 8627 7414 17563 8945 8618 1.B.2 Investment income 56107 195572 -139465 67585 193203 -125618 1.B.2.1 Direct investment 20904 115646 -94742 23767 113792 -90025 1.B.2.2 Portfolio investment 782 19786 -19004 951 16786 -15835 1.B.2.3 Other investment 7255 58240 -50985 7328 61075 -53747 1.B.2.4 Reserve assets 27166 1900 25266 35540 1549 33990 1.B.3 Other primary income 14656 5627 9029 17969 3932 14037 1.C Secondary Income (1.C.1+1.C.2) 266464 27865 238599 300830 27593 273237 1.C.1 Financial corporations, nonfinancial corporations, households, and NPISHs 266068 25705 240363 300561 24588 275973 1.C.1.1 Personal transfers (Current transfers between resident and/non-resident households) 259885 19295 240591 294061 18164 275897 1.C.1.2 Other current transfers 6183 6410 -227 6501 6424 76 1.C.2 General government 396 2160 -1764 269 3005 -2736 2 Capital Account (2.1+2.2) 1509 1144 364 1714 2414 -699 2.1 Gross acquisitions (DR.)/disposals (CR.) of non-produced nonfinancial assets 171 419 -248 136 971 -835 2.2 Capital transfers 1338 725 613 1578 1443 135 3 Financial Account (3.1 to 3.5) 2057963 2101748 -43785 2214747 2338757 -124010 3.1 Direct Investment (3.1A+3.1B) 167544 148458 19086 160253 157078 3175 3.1.A Direct Investment in India 161684 94741 66943 151875 64767 87108 3.1.A.1 Equity and investment fund shares 150237 90780 59457 136699 62383 74316 3.1.A.1.1 Equity other than reinvestment of earnings 105963 90780 15183 83277 62383 20894 3.1.A.1.2 Reinvestment of earnings 44274 0 44274 53422 0 53422 3.1.A.2 Debt instruments 11447 3960 7487 15176 2384 12792 3.1.A.2.1 Direct investor in direct investment enterprises 11447 3960 7487 15176 2384 12792 3.1.B Direct Investment by India 5860 53718 -47858 8378 92311 -83933 3.1.B.1 Equity and investment fund shares 5860 38647 -32787 8378 69605 -61227 3.1.B.1.1 Equity other than reinvestment of earnings 5860 26638 -20778 8378 54774 -46396 3.1.B.1.2 Reinvestment of earnings 0 12009 -12009 0 14831 -14831 3.1.B.2 Debt instruments 0 15071 -15071 0 22706 -22706 3.1.B.2.1 Direct investor in direct investment enterprises 0 15071 -15071 0 22706 -22706 3.2 Portfolio Investment 1153057 1058474 94583 1091568 1142335 -50767 3.2.A Portfolio Investment in India 1147577 1051439 96139 1082489 1134435 -51945 3.2.1 Equity and investment fund shares 1002841 991563 11278 881113 998454 -117341 3.2.2 Debt securities 144736 59875 84861 201376 135981 65395 3.2.B Portfolio Investment by India 5480 7035 -1555 9079 7900 1178 3.3 Financial derivatives (other than reserves) and employee stock options 50865 77053 -26187 42703 107351 -64648 3.4 Other investment 686496 562423 124073 920223 855837 64386 3.4.1 Other equity (ADRs/GDRs) 0 0 0 0 0 0 3.4.2 Currency and deposits 224139 171683 52457 227792 205167 22625 3.4.2.1 Central bank (Rupee Debt Movements; NRG) 7926 0 7926 0 1899 -1899 3.4.2.2 Deposit-taking corporations, except the central bank (NRI Deposits) 216214 171683 44531 227792 203268 24524 3.4.2.3 General government 0 0 0 0 0 0 3.4.2.4 Other sectors 0 0 0 0 0 0 3.4.3 Loans (External Assistance, ECBs and Banking Capital) 269294 233863 35431 431378 445598 -14220 3.4.3.A Loans to India 240986 197839 43147 230804 248960 -18156 3.4.3.B Loans by India 28307 36024 -7717 200574 196638 3936 3.4.4 Insurance, pension, and standardized guarantee schemes 448 704 -257 484 5456 -4972 3.4.5 Trade credit and advances 108592 106817 1775 117484 155634 -38150 3.4.6 Other accounts receivable/payable - other 84023 49357 34667 143085 43982 99102 3.4.7 Special drawing rights 0 0 0 0 0 0 3.5 Reserve assets 0 255339 -255339 0 76155 -76155 3.5.1 Monetary gold 0 0 0 0 0 0 3.5.2 Special drawing rights n.a. 0 0 0 0 0 0 3.5.3 Reserve position in the IMF n.a. 0 0 0 0 0 0 3.5.4 Other reserve assets (Foreign Currency Assets) 0 255339 -255339 0 76155 -76155 4 Total assets/liabilities 2057963 2101748 -43785 2214747 2338757 -124010 4.1 Equity and investment fund shares 1215731 1205783 9948 1078457 1251149 -172693 4.2 Debt instruments 758209 591269 166940 993206 967470 25736 4.3 Other financial assets and liabilities 84023 304696 -220673 143085 120138 22947 5 Net errors and omissions 5343 0 5343 7905 0 7905 Note: P: Preliminary. RBI Bulletin July 2025 141CURRENT STATISTICS No. 42: India’s International Investment Position (US$ Million) Item As on Financial Year/Quarter End 2024-25 2024 2025 Mar. Dec. Mar. Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities 1 2 3 4 5 6 7 8 1. Direct investment Abroad/in India 270441 556812 242271 542952 260755 547104 270441 556812 1.1 Equity Capital* 173559 521931 153343 511142 166493 512997 173559 521931 1.2 Other Capital 96882 34881 88927 31810 94262 34107 96882 34881 2. Portfolio investment 13763 272061 12469 277239 12173 276521 13763 272061 2.1 Equity 8727 141938 10942 162061 9356 155573 8727 141938 2.2 Debt 5036 130123 1527 115178 2817 120948 5036 130123 3. Other investment 186700 640384 132617 574786 170526 619693 186700 640384 3.1 Trade credit 33422 131203 33413 123722 33213 135606 33422 131203 3.2 Loan 25891 250551 17547 221396 22523 240588 25891 250551 3.3 Currency and Deposits 79332 167598 53519 154787 68630 165713 79332 167598 3.4 Other Assets/Liabilities 48055 91032 28138 74880 46160 77785 48055 91032 4. Reserves 668326 646419 635701 668326 5. Total Assets/ Liabilities 1139230 1469257 1033776 1394977 1079156 1443318 1139230 1469257 6. Net IIP (Assets - Liabilities) -330027 -361201 -364162 -330027 Note: * Equity capital includes share of investment funds and reinvested earnings. 142 RBI Bulletin July 2025CURRENT STATISTICS Payment and Settlement Systems No.43: Payment System Indicators PART I - Payment System Indicators - Payment & Settlement System Statistics System Volume (Lakh) Value (₹ Crore) FY 2024-25 2024 2025 FY 2024-25 2024 2025 May Apr. May May Apr. May 1 -2 -1 0 5 2 3 4 A. Settlement Systems Financial Market Infrastructures (FMIs) 1 CCIL Operated Systems (1.1 to 1.3) 47.40 4.07 5.07 5.48 296218030 22018913 29399814 29656042 1.1 Govt. Securities Clearing (1.1.1 to 1.1.3) 17.87 1.60 1.89 1.94 185733719 14632648 16657576 17500816 1.1.1 Outright 10.56 0.98 1.30 1.28 16056018 1363203 2017823 1875057 1.1.2 Repo 4.72 0.43 0.38 0.45 77286611 6669493 7078422 7645792 1.1.3 Tri-party Repo 2.58 0.19 0.20 0.21 92391091 6599952 7561331 7979967 1.2 Forex Clearing 28.06 2.37 3.07 3.44 100639565 6780829 11992139 11363617 1.3 Rupee Derivatives @ 1.46 0.10 0.11 0.10 9844746 605436 750099 791608 B. Payment Systems I Financial Market Infrastructures (FMIs) - - - - - - - - 1 Credit Transfers - RTGS (1.1 to 1.2) 3024.55 249.71 262.41 274.71 201387682 15186947 16895789 17013770 1.1 Customer Transactions 3010.32 248.49 261.16 273.46 181153129 13559606 15060026 15219873 1.2 Interbank Transactions 14.23 1.22 1.24 1.25 20234553 1627340 1835763 1793897 II Retail 2 Credit Transfers - Retail (2.1 to 2.6) 2061014.91 156773.59 194925.94 203656.72 79781976 6279019 7126205 7146649 2.1 AePS (Fund Transfers) @ 3.64 0.31 0.30 0.31 190 18 16 17 2.2 APBS $ 32964.43 2295.50 2610.51 2786.17 554034 37499 57566 50985 2.3 IMPS 56249.68 5576.99 4492.53 4636.60 7139110 606167 621666 640867 2.4 NACH Cr $ 16938.86 1074.61 1200.84 1243.57 1670223 132404 154683 147380 2.5 NEFT 96198.05 7467.75 7687.52 8215.47 44361464 3457995 3897348 3793103 2.6 UPI @ 1858660.25 140358.43 178934.24 186774.60 26056955 2044937 2394926 2514297 2.6.1 of which USSD @ 17.24 1.62 1.22 1.79 185 17 13 33 3 Debit Transfers and Direct Debits (3.1 to 3.3) 21659.95 1698.67 1869.90 1895.74 2208583 167035 198565 206368 3.1 BHIM Aadhaar Pay @ 230.08 19.33 17.39 19.51 6907 506 601 641 3.2 NACH Dr $ 19762.28 1539.23 1709.27 1723.65 2199327 166305 197780 205535 3.3 NETC (linked to bank account) @ 1667.59 140.11 143.24 152.58 2349 225 184 192 4 Card Payments (4.1 to 4.2) 63861.15 5105.17 5673.64 5827.40 2605110 208520 222351 226810 4.1 Credit Cards (4.1.1 to 4.1.2) 47740.76 3601.36 4502.70 4676.93 2109197 164955 184237 189832 4.1.1 PoS based $ 24571.10 1906.58 2281.41 2359.14 795022 63831 67899 69607 4.1.2 Others $ 23169.66 1694.78 2221.29 2317.79 1314175 101124 116338 120224 4.2 Debit Cards (4.2.1 to 4.2.1 ) 16120.39 1503.82 1170.93 1150.47 495914 43565 38113 36978 4.2.1 PoS based $ 11980.33 1114.35 875.30 861.57 332556 29772 26187 24735 4.2.2 Others $ 4140.06 389.47 295.63 288.90 163358 13793 11926 12243 5 Prepaid Payment Instruments (5.1 to 5.2) 70254.08 5496.00 6768.43 7106.39 216751 16697 21254 20722 5.1 Wallets 52898.40 4204.49 5157.38 5474.25 154066 11566 15896 16668 5.2 Cards (5.2.1 to 5.2.2) 17355.68 1291.51 1611.04 1632.13 62686 5131 5358 4053 5.2.1 PoS based $ 8240.14 689.94 649.25 650.54 11512 1027 1093 981 5.2.2 Others $ 9115.54 601.57 961.79 981.59 51174 4104 4265 3072 6 Paper-based Instruments (6.1 to 6.2) 6095.38 524.39 494.77 481.93 7113350 611518 645079 596239 6.1 CTS (NPCI Managed) 6095.38 524.39 494.77 481.93 7113350 611518 645079 596239 6.2 Others 0.00 – – – – – – – Total - Retail Payments (2+3+4+5+6) 2222885.46 169597.82 209732.67 218968.18 91925771 7282789 8213454 8196787 Total Payments (1+2+3+4+5+6) 2225910.01 169847.53 209995.08 219242.89 293313453 22469736 25109243 25210557 Total Digital Payments (1+2+3+4+5) 2219814.63 169323.14 209500.31 218760.96 286200103 21858218 24464164 24614318 RBI Bulletin July 2025 143CURRENT STATISTICS PART II - Payment Modes and Channels System Volume (Lakh) Value (₹ Crore) FY 2024-25 2024 2025 FY 2024-25 2024 2025 May Apr. May May Apr. May 1 2 3 4 5 6 7 8 A. Other Payment Channels 1 Mobile Payments (mobile app based) (1.1 to 1.2) 1756976.91 133232.33 165815.85 173273.19 39206221 3092908 3505147 3642370 1.1 Intra-bank $ 110801.96 8851.50 9304.93 9743.47 7207439 571075 617898 638705 1.2 Inter-bank $ 1646174.95 124380.84 156510.92 163529.72 31998782 2521832 2887249 3003664 2 Internet Payments (Netbanking / Internet Browser Based) @ (2.1 to 2.2) 47478.09 3812.36 3653.49 3668.56 131858133 9595069 11633517 11653243 2.1 Intra-bank @ 13056.37 1012.11 838.00 851.51 69086996 4905987 6048107 6063029 2.2 Inter-bank @ 34421.72 2800.25 2815.49 2817.05 62771136 4689082 5585409 5590213 B. ATMs 3 Cash Withdrawal at ATMs $ (3.1 to 3.3) 60308.11 5166.41 4602.65 4604.61 3063077 260240 244747 246201 3.1 Using Credit Cards $ 97.25 8.63 6.86 6.70 5084 441 373 370 3.2 Using Debit Cards $ 59965.70 5133.52 4578.06 4579.88 3046987 258785 243494 244945 3.3 Using Pre-paid Cards $ 245.16 24.26 17.73 18.03 11005 1014 881 886 4 Cash Withdrawal at PoS $ (4.1 to 4.2) 3.58 0.33 0.17 0.15 37 3 2 2 4.1 Using Debit Cards $ 3.33 0.31 0.15 0.13 35 3 1 1 4.2 Using Pre-paid Cards $ 0.25 0.02 0.02 0.03 3 0 0 0 5 Cash Withrawal at Micro ATMs @ 11640.55 879.79 928.36 1017.25 296622 22804 25662 27668 5.1 AePS @ 11640.55 879.79 928.36 1017.25 296622 22804 25662 27668 PART III - Payment Infrastructures (Lakh) System As on March 2024 2025 2025 May Apr. May 1 2 3 4 Payment System Infrastructures 1 Number of Cards (1.1 to 1.2) 11006.97 10598.99 11064.20 11115.67 1.1 Credit Cards 1098.85 1033.00 1104.36 1111.98 1.2 Debit Cards 9908.12 9565.98 9959.84 10003.70 2 Number of PPIs @ (2.1 to 2.2) 13396.53 14840.92 13444.93 13513.51 2.1 Wallets @ 8673.62 11302.14 8719.54 8692.12 2.2 Cards @ 4722.91 3538.78 4725.39 4821.38 3 Number of ATMs (3.1 to 3.2) 2.56 2.57 2.55 2.57 3.1 Bank owned ATMs $ 2.20 2.22 2.19 2.21 3.2 White Label ATMs $ 0.36 0.36 0.36 0.36 4 Number of Micro ATMs @ 14.82 15.69 14.74 14.78 5 Number of PoS Terminals 110.98 88.04 112.91 115.89 6 Bharat QR @ 67.18 61.21 66.84 66.64 7 UPI QR * 6579.30 5690.84 6624.75 6698.20 @: New inclusion w.e.f. November 2019 #: Data reported by Co-operative Banks, LABs and RRBs included with effect from December 2021. $ : Inclusion separately initiated from November 2019 - would have been part of other items hitherto. *: New inclusion w.e.f. September 2020; Includes only static UPI QR Code Notes : 1. D ata is provisional. 2. ECS (Debit and Credit) has been merged with NACH with effect from January 31, 2020. 3. The data from November 2019 onwards for card payments (Debit/Credit cards) and Prepaid Payment Instruments (PPIs) may not be comparable with earlier months/ periods, as more granular data is being published along with revision in data definitions. 4. Only domestic financial transactions are considered. The new format captures e-commerce transactions; transactions using FASTags, digital bill payments and card-to-card transfer through ATMs, etc.. Also, failed transactions, chargebacks, reversals, expired cards/ wallets, are excluded. Part I-A. Settlement systems 1.1.3: Tri- party Repo under the securities segment has been operationalised from November 05, 2018. Part I-B. Payments systems 4.1.2: ‘Others’ includes e-commerce transactions and digital bill payments through ATMs, etc. 4.2.2: ‘Others’ includes e-commerce transactions, card to card transfers and digital bill payments through ATMs, etc. 5: Available from December 2010. 5.1: includes purchase of goods and services and fund transfer through wallets. 5.2.2: includes usage of PPI Cards for online transactions and other transactions. 6.1: Pertain to three grids – Mumbai, New Delhi and Chennai. 6.2: ‘Others’ comprises of Non-MICR transactions which pertains to clearing houses managed by 21 banks. Part II-A. Other payment channels 1: Mobile Payments – o Include transactions done through mobile apps of banks and UPI apps. o The data from July 2017 includes only individual payments and corporate payments initiated, processed, and authorised using mobile device. Other corporate payments which are not initiated, processed, and authorised using mobile device are excluded. 2: Internet Payments – includes only e-commerce transactions through ‘netbanking’ and any financial transaction using internet banking website of the bank. Part II-B. ATMs 3.3 and 4.2: only relates to transactions using bank issued PPIs. Part III. Payment systems infrastructure 3: Includes ATMs deployed by Scheduled Commercial Banks (SCBs) and White Label ATM Operators (WLAOs). WLAs are included from April 2014 onwards. 144 RBI Bulletin July 2025CURRENT STATISTICS Occasional Series No. 44: Small Savings (₹ Crore) Scheme 2023-24 2024 2025 Feb. Dec. Jan. Feb. 1 2 3 4 5 1 Small Savings Receipts 232460 14570 11133 12581 11379 Outstanding 1865029 1819758 1982465 1994553 2005585 1.1 Total Deposits Receipts 161344 10025 8734 9178 8077 Outstanding 1298795 1268920 1395484 1404661 1412738 1.1.1 Post Office Saving Bank Deposits Receipts 17229 1520 1090 2702 814 Outstanding 191692 218498 201999 204701 205515 1.1.2 Sukanya Samriddhi Yojna Receipts 35174 2233 2244 2347 2282 Outstanding 157611 109222 177007 179354 181636 1.1.3 National Saving Scheme, 1987 Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.1.4 National Saving Scheme, 1992 Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.1.5 Monthly Income Scheme Receipts 26696 1927 827 1279 1045 Outstanding 269007 267205 282142 283421 284466 1.1.6 Senior Citizen Scheme 2004 Receipts 38167 2153 1531 1922 1952 Outstanding 175472 173476 194605 196527 198479 1.1.7 Post Office Time Deposits Receipts 25341 2632 2125 2853 2108 Outstanding 305776 303000 330912 333764 335872 1.1.7.1 1 year Time Deposits Outstanding 140423 138552 159174 161578 163358 1.1.7.2 2 year Time Deposits Outstanding 11967 11730 14299 14476 14637 1.1.7.3 3 year Time Deposits Outstanding 8932 8782 10308 10487 10645 1.1.7.4 5 year Time Deposits Outstanding 144454 143936 147131 147223 147232 1.1.8 Post Office Recurring Deposits Receipts 18713 -420 1025 -1831 -25 Outstanding 197134 195727 207269 205438 205413 1.1.9 Post Office Cumulative Time Deposits Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.1.10 Other Deposits Receipts 8 -20 -108 -95 -100 Outstanding 1754 1444 1195 1100 1000 1.1.11 PM Care for children Receipts 16 0 0 1 1 Outstanding 349 348 355 356 357 1.2 Saving Certificates Receipts 56069 3940 2226 3019 2858 Outstanding 418021 414597 438074 440601 443112 1.2.1 National Savings Certificate VIII issue Receipts 16853 1446 430 796 762 Outstanding 183905 180181 192621 193417 194179 1.2.2 Indira Vikas Patras Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.3 Kisan Vikas Patras Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.4 Kisan Vikas Patras - 2014 Receipts 20939 1428 1113 1376 1247 Outstanding 220560 219498 228707 230083 231330 1.2.5 National Saving Certificate VI issue Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.6 National Saving Certificate VII issue Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.7 M.S. Certificates Receipts 18277 1066 683 847 849 Outstanding 18277 17235 25303 26150 26999 1.2.8 Other Certificates Outstanding -4721 -2317 -8557 -9049 -9396 1.3 Public Provident Fund Receipts 15047 605 173 384 444 Outstanding 148213 136241 148907 149291 149735 Note : Data on receipts from April 2017 are net receipts, i.e., gross receipt minus gross payment. Source: Accountant General, Post and Telegraphs. RBI Bulletin July 2025 145CURRENT STATISTICS No. 45 : Ownership Pattern of Central and State Governments Securities (Per cent) Central Government Dated Securities 2024 2025 Category Mar. Jun. Sep. Dec. Mar. 1 2 3 4 5 (A) Total (in ₹ Crore) 10740389 10946860 11271589 11422728 11642652 1 Commercial Banks 37.66 37.52 37.55 37.98 36.18 2 Co-operative Banks 1.47 1.42 1.35 1.36 1.29 3 Non-Bank PDs 0.66 0.70 0.77 0.65 0.76 4 Insurance Companies 25.98 26.11 25.95 26.14 25.81 5 Mutual Funds 2.90 2.87 3.14 3.11 2.68 6 Provident Funds 4.47 4.41 4.25 4.25 4.24 7 Pension Funds 4.52 4.74 4.86 5.05 4.91 8 Financial Institutions 0.55 0.57 0.63 0.64 0.71 9 Corporates 1.35 1.44 1.60 1.45 1.49 10 Foreign Portfolio Investors 2.34 2.34 2.80 2.81 3.12 11 RBI 12.31 11.92 11.16 10.55 12.78 12 Others 5.79 5.97 5.92 6.01 6.01 12.1 State Governments 2.04 2.13 2.19 2.21 2.25 State Governments Securities 2024 2025 Category Mar. Jun. Sep. Dec. Mar. 1 2 3 4 5 (B) Total (in ₹ Crore) 5646219 5727482 5909490 6055711 6399564 1 Commercial Banks 34.14 33.85 34.39 35.11 35.40 2 Co-operative Banks 3.39 3.38 3.29 3.22 3.08 3 Non-Bank PDs 0.60 0.59 0.60 0.53 0.61 4 Insurance Companies 26.14 25.85 25.56 25.16 24.07 5 Mutual Funds 2.09 2.08 1.93 1.89 1.93 6 Provident Funds 22.35 22.94 23.02 22.90 23.60 7 Pension Funds 4.76 4.87 4.87 4.82 5.07 8 Financial Institutions 1.59 1.58 1.57 1.58 1.48 9 Corporates 2.02 2.03 1.95 1.97 2.05 10 Foreign Portfolio Investors 0.07 0.05 0.04 0.03 0.05 11 RBI 0.63 0.62 0.60 0.58 0.55 12 Others 2.20 2.17 2.18 2.19 2.10 12.1 State Governments 0.25 0.26 0.26 0.26 0.25 Treasury Bills 2024 2025 Category Mar. Jun. Sep. Dec. Mar. 1 2 3 4 5 (C) Total (in ₹ Crore) 871662 858193 747242 760045 790381 1 Commercial Banks 58.53 47.79 44.74 40.45 46.58 2 Co-operative Banks 1.67 1.49 1.58 1.22 2.17 3 Non-Bank PDs 1.66 2.69 2.28 1.41 2.09 4 Insurance Companies 5.06 5.78 5.26 4.73 4.23 5 Mutual Funds 11.89 14.50 15.06 15.41 16.15 6 Provident Funds 0.15 0.60 0.26 0.04 0.20 7 Pension Funds 0.01 0.00 0.00 0.00 0.02 8 Financial Institutions 7.16 6.56 6.36 6.77 7.73 9 Corporates 4.50 4.79 4.66 4.56 4.50 10 Foreign Portfolio Investors 0.01 0.20 0.15 0.12 0.09 11 RBI 0.00 0.00 0.00 0.00 0.00 12 Others 9.36 15.59 19.65 25.29 16.23 12.1 State Governments 5.88 11.55 14.95 20.11 11.23 Notes: (1) The table format is revised since monthly Bulletin for the month of June 2023. (2) Central Government Dated Securities include special securities and Sovereign Gold Bonds. (3) State Government Securities include special bonds issued under Ujwal DISCOM Assurance Yojana (UDAY). (4) Bank PDs are clubbed under Commercial Banks. (5) The category ‘Others’ comprises State Governments, DICGC, PSUs, Trusts, Foreign Central Banks, HUF/ Individuals etc. (6) Data since September 2023 includes the impact of the merger of a non-bank with a bank. 146 RBI Bulletin July 2025CURRENT STATISTICS No. 46: Combined Receipts and Disbursements of the Central and State Governments (₹ Crore) Item 2019-20 2020-21 2021-22 2022-23 2023-24 RE 2024-25 BE 1 2 3 4 5 6 1 Total Disbursements 5410887 6353359 7098451 7880522 9110725 9800798 1.1 Developmental 3074492 3823423 4189146 4701611 5514584 5862996 1.1.1 Revenue 2446605 3150221 3255207 3574503 3965270 4195108 1.1.2 Capital 588233 550358 861777 1042159 1453849 1526993 1.1.3 Loans 39654 122844 72163 84949 95464 140895 1.2 Non-Developmental 2253027 2442941 2810388 3069896 3467270 3800321 1.2.1 Revenue 2109629 2271637 2602750 2895864 3266628 3537378 1.2.1.1 Interest Payments 955801 1060602 1226672 1377807 1562660 1711972 1.2.2 Capital 141457 169155 175519 171131 196073 259346 1.2.3 Loans 1941 2148 32119 2902 4569 3597 1.3 Others 83368 86995 98916 109015 128871 137481 2 Total Receipts 5734166 6397162 7156342 7855370 9054999 9650488 2.1 Revenue Receipts 3851563 3688030 4823821 5447913 6379349 7209647 2.1.1 Tax Receipts 3231582 3193390 4160414 4809044 5456913 6142276 2.1.1.1 Taxes on commodities and services 2012578 2076013 2626553 2865550 3248450 3631569 2.1.1.2 Taxes on Income and Property 1216203 1114805 1530636 1939550 2204462 2506181 2.1.1.3 Taxes of Union Territories (Without Legislature) 2800 2572 3225 3943 4001 4526 2.1.2 Non-Tax Receipts 619981 494640 663407 638870 922436 1067371 2.1.2.1 Interest Receipts 31137 33448 35250 42975 49552 57273 2.2 Non-debt Capital Receipts 110094 64994 44077 62716 86733 118239 2.2.1 Recovery of Loans & Advances 59515 16951 27665 15970 55895 45125 2.2.2 Disinvestment proceeds 50578 48044 16412 46746 30839 73114 3 Gross Fiscal Deficit [ 1 - ( 2.1 + 2.2 ) ] 1449230 2600335 2230553 2369892 2644642 2472912 3A Sources of Financing: Institution-wise 3A.1 Domestic Financing 1440548 2530155 2194406 2332768 2619811 2456959 3A.1.1 Net Bank Credit to Government 571872 890012 627255 687904 346483 ... 3A.1.1.1 Net RBI Credit to Government 190241 107493 350911 529 -257913 ... 3A.1.2 Non-Bank Credit to Government 868676 1640143 1567151 1644864 2273328 ... 3A.2 External Financing 8682 70180 36147 37124 24832 15952 3B Sources of Financing: Instrument-wise 3B.1 Domestic Financing 1440548 2530155 2194406 2332768 2619811 2456959 3B.1.1 Market Borrowings (net) 971378 1696012 1213169 1651076 1962969 1983757 3B.1.2 Small Savings (net) 209232 458801 526693 358764 434151 447511 3B.1.3 State Provident Funds (net) 38280 41273 28100 13880 21386 19857 3B.1.4 Reserve Funds 10411 4545 42153 68803 52385 -33653 3B.1.5 Deposits and Advances -14227 25682 42203 51989 35819 -10138 3B.1.6 Cash Balances -323279 -43802 -57891 25152 55726 150310 3B.1.7 Others 548753 347643 399980 163104 57374 -100684 3B.2 External Financing 8682 70180 36147 37124 24832 15952 4 Total Disbursements as per cent of GDP 26.9 32.0 30.1 29.2 30.8 30.0 5 Total Receipts as per cent of GDP 28.5 32.2 30.3 29.1 30.7 29.6 6 Revenue Receipts as per cent of GDP 19.2 18.6 20.4 20.2 21.6 22.1 7 Tax Receipts as per cent of GDP 16.1 16.1 17.6 17.8 18.5 18.8 8 Gross Fiscal Deficit as per cent of GDP 7.2 13.1 9.5 8.8 9.0 7.6 … : Not available; RE: Revised Estimates; BE: Budget Estimates Source : Budget Documents of Central and State Governments. Notes: GDP data is based on 2011-12 base. GDP for 2024-25 is from Union Budget 2024-25. Data pertains to all States and Union Territories. 1 & 2: Data are net of repayments of the Central Government (including repayments to the NSSF) and State Governments. 1.3: Represents compensation and assignments by States to local bodies and Panchayati Raj institutions. 2: Data are net of variation in cash balances of the Central and State Governments and includes borrowing receipts of the Central and State Governments. 3A.1.1: Data as per RBI records. 3B.1.1: Borrowings through dated securities. 3B.1.2: Represent net investment in Central and State Governments’ special securities by the National Small Savings Fund (NSSF). This data may vary from previous publications due to adjustments across components with availability of new data. 3B.1.6: Include Ways and Means Advances by the Centre to the State Governments. 3B.1.7: Include Treasury Bills, loans from financial institutions, insurance and pension funds, remittances, cash balance investment account. RBI Bulletin July 2025 147CURRENT STATISTICS No. 47: Financial Accommodation Availed by State Governments under various Facilities (₹ Crore) During May-2025 Sr. State/Union Territory Special Drawing Ways and Means Overdraft (OD) No Facility (SDF) Advances (WMA) Average Number Average Number Average Number amount of days amount of days amount of days availed availed availed availed availed availed 1 2 3 4 5 6 7 1 Andhra Pradesh 6087.04 31 1722.23 17 2853.31 7 2 Arunachal Pradesh - - - - - - 3 Assam 2100.50 21 - - - - 4 Bihar - - - - - - 5 Chhattisgarh 502.67 1 - - - - 6 Goa - - - - - - 7 Gujarat - - - - - - 8 Haryana 393.04 6 - - - - 9 Himachal Pradesh - - 613.82 30 431.36 12 10 Jammu & Kashmir UT 18.41 16 236.35 15 - - 11 Jharkhand - - - - - - 12 Karnataka - - - - - - 13 Kerala 1626.96 30 1531.56 29 276.71 3 14 Madhya Pradesh - - - - - - 15 Maharashtra 7254.77 20 - - - - 16 Manipur 106.89 29 192.90 26 36.27 4 17 Meghalaya 703.51 31 206.59 24 165.46 12 18 Mizoram - - - - - - 19 Nagaland 246.94 31 - - - - 20 Odisha - - - - - - 21 Puducherry - - - - - - 22 Punjab 4678.53 31 1279.05 25 317.61 8 23 Rajasthan 3835.72 27 1871.36 21 1587.48 1 24 Tamil Nadu 197.35 1 - - - - 25 Telangana 4967.48 31 1446.29 24 1051.55 7 26 Tripura - - - - - - 27 Uttar Pradesh - - - - - - 28 Uttarakhand 817.26 22 - - - - 29 West Bengal - - - - - - Notes: 1. SDF is availed by State Governments against the collateral of Consolidated Sinking Fund (CSF), Guarantee Redemption Fund (GRF) & Auction Treasury Bills (ATBs) balances and other investments in government securities. 2. WMA is advance by Reserve Bank of India to State Governments for meeting temporary cash mismatches. 3. OD is advanced to State Governments beyond their WMA limits. 4. Average amount availed is the total accommodation (SDF/WMA/OD) availed divided by number of days for which accommodation was extended during the month. 5. - : Nil. Source: Reserve Bank of India. 148 RBI Bulletin July 2025CURRENT STATISTICS No. 48: Investments by State Governments (₹ Crore) As on end of May 2025 Consolidated Guarantee Sr. State/Union Government Auction Treasury Sinking Fund Redemption Fund No Territory Securities Bills (ATBs) (CSF) (GRF) 1 2 3 4 5 1 Andhra Pradesh 11808 1165 0 0 2 Arunachal Pradesh 2809 7 0 2300 3 Assam 7526 92 0 0 4 Bihar 12742 - 0 12500 5 Chhattisgarh 8395 974 0 6406 6 Goa 1100 466 0 0 7 Gujarat 15560 679 0 2500 8 Haryana 2660 1739 0 0 9 Himachal Pradesh - - 0 0 10 Jammu & Kashmir UT 37 36 0 0 11 Jharkhand 2455 - 0 780 12 Karnataka 20682 769 0 70642 13 Kerala 3296 - 0 0 14 Madhya Pradesh - 1305 0 1400 15 Maharashtra 72748 2194 0 0 16 Manipur 71 143 0 0 17 Meghalaya 1298 111 0 0 18 Mizoram 514 81 0 0 19 Nagaland 1926 47 0 0 20 Odisha 18626 2087 0 8258 21 Puducherry 593 - 0 1950 22 Punjab 9342 0 0 0 23 Rajasthan 1827 - 0 7750 24 Tamil Nadu 3506 - 0 2137 25 Telangana 8054 1767 0 0 26 Tripura 1343 30 0 0 27 Uttarakhand 5412 263 0 0 28 Uttar Pradesh 14274 2245 0 0 29 West Bengal 14111 1055 0 4000 Total 242715 17254 0 120623 Notes: 1. CSF and GRF are reserve funds maintained by some State Governments with the Reserve Bank of India. 2. ATBs include investment by State Governments in Treasury bills of 91 days, 182 days and 364 days in the primary market. 3. - : Not Applicable (not a member of the scheme). RBI Bulletin July 2025 149CURRENT STATISTICS No. 49: Market Borrowings of State Governments (₹ Crore) 2024-25 2025-26 Total amount 2023-24 2024-25 raised, so far in March April May 2025-26 Sr. No. State Gross Net Gross Net Gross Net Gross Net Gross Net Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount Gross Net Raised Raised Raised Raised Raised Raised Raised Raised Raised Raised 1 2 3 4 5 6 7 8 9 10 11 12 13 1 Andhra Pradesh 68400 55330 78205 57123 8148 7148 5750 4750 6822 4322 12572 9072 2 Arunachal Pradesh 902 672 1010 704 215 135 - -130 - - - -130 3 Assam 18500 16000 19000 13850 3300 1800 900 -50 2600 2600 3500 2550 4 Bihar 47612 29910 47546 30890 - -478 - - - - - - 5 Chhattisgarh 32000 26213 24500 16913 14000 12613 1970 1970 1000 1000 2970 2970 6 Goa 2550 1560 1050 250 - - - -150 100 -50 100 -200 7 Gujarat 30500 11947 38200 16280 8000 5000 - -2560 8500 4500 8500 1940 8 Haryana 47500 28364 49500 31710 12000 5690 2000 2000 5000 3100 7000 5100 9 Himachal Pradesh 8072 5856 7359 4725 659 659 2200 1550 - - 2200 1550 10 Jammu & Kashmir UT 16337 13904 13170 11416 300 86 1000 1000 800 300 1800 1300 11 Jharkhand 1000 -2505 3500 -2005 3500 1445 - - - - - - 12 Karnataka 81000 63003 92025 71525 20000 19000 - - - - - - 13 Kerala 42438 26638 53666 37966 12744 11744 2000 - 5000 3500 7000 3500 14 Madhya Pradesh 38500 26264 63400 47206 22400 15306 - - 5000 5000 5000 5000 15 Maharashtra 110000 79738 123000 90917 24000 24000 13500 13500 - -3500 13500 10000 16 Manipur 1426 1076 1500 1037 250 250 - -200 750 750 750 550 17 Meghalaya 1364 912 1882 997 - -73 350 250 - - 350 250 18 Mizoram 901 641 1169 939 120 120 - - - - - - 19 Nagaland 2551 2016 1550 950 1000 850 - - - -100 - -100 20 Odisha 0 -4658 20780 17780 11780 10780 - - - - - - 21 Puducherry 1100 475 1600 880 300 280 - - - - - - 22 Punjab 42386 29517 40828 32466 1998 540 5800 4200 5500 4600 11300 8800 23 Rajasthan 73624 49718 75185 49479 11620 5670 5500 3500 8600 6600 14100 10100 24 Sikkim 1916 1701 1951 1621 463 363 - - - - - - 25 Tamil Nadu 113001 75970 123625 89894 22600 20219 4000 1000 7300 1300 11300 2300 26 Telangana 49618 39385 56209 42199 6500 3608 4400 3400 4500 1152 8900 4552 27 Tripura 0 -550 0 -150 - -150 500 500 300 300 800 800 28 Uttar Pradesh 97650 85335 45000 23185 10000 7472 3000 -1000 3000 1000 6000 - 29 Uttarakhand 6300 3800 10400 8000 4000 3250 1000 1000 - - 1000 1000 30 West Bengal 69910 48910 76500 54600 25000 23700 - -1000 - -1500 - -2500 Grand Total 1007058 717140 1073310 753345 224897 181026 53870 33530 64772 34874 118642 68404 - : Nil. Note: The State of J&K has ceased to exist constitutionally from October 31, 2019 and the liabilities of the State continue to remain as liabilities of the new UT of Jammu and Kashmir. Source: Reserve Bank of India. 150 RBI Bulletin July 2025CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Amount in ` Crore) 2021-22 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 3,42,813 3,30,490 4,85,203 5,54,816 17,13,322 Per cent of GDP 6.6 5.9 7.7 8.5 7.3 I. Financial Assets 3,63,395 5,25,419 8,16,484 9,07,366 26,12,664 Per cent of GDP 7.0 9.3 13.0 13.9 11.1 of which: 1.Total Deposits (a)+(b) (81,064) 2,04,486 4,28,035 2,83,634 8,35,091 (a) Bank Deposits (1,06,429) 1,97,105 4,22,393 2,70,025 7,83,094 i. Commercial Banks (1,07,941) 1,95,442 4,18,267 2,62,326 7,68,094 ii. Co-operative Banks 1,512 1,663 4,126 7,699 15,000 (b) Non-Bank Deposits 25,365 7,380 5,642 13,610 51,997 of which: Other Financial Institutions (i+ii) 17,555 (435) (2,178) 5,770 20,712 i. Non-Banking Financial Companies 5,578 (1,371) 73 4,021 8,302 ii. Housing Finance Companies 11,977 936 (2,252) 1,748 12,410 2. Life Insurance Funds 1,15,539 1,28,277 1,04,076 1,38,998 4,86,889 3. Provident and Pension Funds (including PPF) 1,24,971 1,12,810 95,493 2,18,719 5,51,993 4. Currency 1,28,660 (68,631) 62,793 1,46,845 2,69,667 5. Investments 24,884 82,260 69,715 50,926 2,27,785 of which: (a) Mutual Funds 14,573 63,151 37,912 44,964 1,60,600 (b) Equity 4,502 13,218 27,808 3,084 48,613 6. Small Savings (excluding PPF) 50,405 66,218 56,372 68,243 2,41,238 II. Financial Liabilities 20,583 1,94,929 3,31,281 3,52,550 8,99,343 Per cent of GDP 0.4 3.5 5.3 5.4 3.8 Loans (Borrowings) from 1. Financial Corporations (a+b) 20,479 1,94,825 3,31,178 3,52,446 8,98,928 (a) Banking Sector 21,428 1,38,720 2,67,955 2,74,181 7,02,284 of which: i. Commercial Banks 26,979 1,40,269 2,65,271 3,37,010 7,69,529 (b) Other Financial Institutions (949) 56,105 63,223 78,266 1,96,644 i. Non-Banking Financial Companies (8,708) 30,151 32,177 40,003 93,623 ii. Housing Finance Companies 7,132 24,404 29,495 37,436 98,467 iii. Insurance Corporations 627 1,550 1,551 827 4,554 2. Non-Financial Corporations (Private 34 34 34 34 135 Corporate Business) 3. General Government 70 70 70 70 279 RBI Bulletin July 2025 151CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Contd.) (Amount in ` Crore) 2022-23 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 2,89,980 2,99,395 2,96,132 4,54,240 13,39,748 Per cent of GDP 4.5 4.6 4.3 6.4 5.0 I. Financial Assets 5,79,958 6,34,471 7,50,245 9,71,526 29,36,200 Per cent of GDP 8.9 9.8 10.9 13.6 10.9 of which: 1.Total Deposits (a)+(b) 1,85,429 3,17,361 2,80,233 3,25,853 11,08,876 (a) Bank Deposits 1,63,172 2,99,533 2,56,400 3,07,867 10,26,971 i. Commercial Banks 1,58,613 3,00,565 2,48,460 2,84,968 9,92,606 ii. Co-operative Banks 4,559 (1,032) 7,940 22,899 34,365 (b) Non-Bank Deposits 22,257 17,829 23,833 17,986 81,905 of which: Other Financial Institutions (i+ii) 6,505 2,077 8,082 2,234 18,897 i. Non-Banking Financial Companies 4,231 3,267 3,247 3,946 14,690 ii. Housing Finance Companies 2,274 (1,191) 4,835 (1,712) 4,207 2. Life Insurance Funds 73,298 1,51,677 1,67,522 1,56,613 5,49,109 3. Provident and Pension Funds (including PPF) 1,48,915 1,20,367 1,38,584 2,18,709 6,26,575 4. Currency 66,439 (54,579) 76,760 1,48,990 2,37,610 5. Investments 51,503 48,530 49,779 64,151 2,13,962 of which: (a) Mutual Funds 35,443 44,484 40,206 58,955 1,79,088 (b) Equity 13,561 1,378 6,434 1,665 23,038 6. Small Savings (excluding PPF) 54,375 51,115 37,368 57,211 2,00,068 II. Financial Liabilities 2,89,978 3,35,076 4,54,113 5,17,285 15,96,452 Per cent of GDP 4.5 5.2 6.6 7.3 5.9 Loans (Borrowings) from 1. Financial Corporations (a+b) 2,89,781 3,34,880 4,53,917 5,17,089 15,95,667 (a) Banking Sector 2,34,235 2,63,450 3,70,783 3,83,845 12,52,313 of which: i. Commercial Banks 2,30,284 2,61,265 3,68,305 3,31,293 11,91,146 (b) Other Financial Institutions 55,546 71,429 83,134 1,33,244 3,43,354 i. Non-Banking Financial Companies 30,532 36,650 55,792 94,565 2,17,539 ii. Housing Finance Companies 22,337 33,031 24,903 36,746 1,17,017 iii. Insurance Corporations 2,678 1,748 2,439 1,933 8,798 2. Non-Financial Corporations (Private 34 34 34 34 135 Corporate Business) 3. General Government 163 163 163 163 650 152 RBI Bulletin July 2025CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Concld.) (Amount in ` Crore) 2023-24 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 3,53,093 2,89,675 2,98,111 6,11,366 15,52,245 Per cent of GDP 5.0 4.1 3.9 7.8 5.3 I. Financial Assets 6,74,763 8,15,842 8,08,779 11,32,130 34,31,514 Per cent of GDP 9.6 11.5 10.7 14.5 11.6 of which: 1.Total Deposits (a)+(b) 2,68,925 4,12,388 2,99,372 4,10,559 13,91,244 (a) Bank Deposits 2,55,249 5,06,208 2,79,872 3,94,573 14,35,902 i. Commercial Banks 2,46,079 5,06,700 2,82,537 3,87,313 14,22,629 ii. Co-operative Banks 9,170 (492) (2,665) 7,260 13,273 (b) Non-Bank Deposits 13,676 (93,820) 19,499 15,986 (44,658) of which: Other Financial Institutions (i+ii) (485) (1,07,982) 5,338 1,825 (1,01,305) i. Non-Banking Financial Companies 6,119 4,782 4,896 1,943 17,740 ii. Housing Finance Companies (6,605) (1,12,764) 442 (118) (1,19,045) 2. Life Insurance Funds 1,58,358 1,41,413 1,61,192 1,30,036 5,90,999 3. Provident and Pension Funds (including PPF) 1,63,508 1,48,178 1,53,255 2,53,719 7,18,661 4. Currency (48,636) (36,701) 56,719 1,46,644 1,18,026 5. Investments 41,409 73,060 79,633 1,08,732 3,02,834 of which: (a) Mutual Funds 32,086 55,769 60,135 90,973 2,38,962 (b) Equity 3,757 7,146 9,941 8,236 29,080 6. Small Savings (excluding PPF) 91,198 77,504 58,607 82,441 3,09,751 II. Financial Liabilities 3,21,670 5,26,167 5,10,667 5,20,764 18,79,269 Per cent of GDP 4.6 7.4 6.7 6.7 6.4 Loans (Borrowings) from 1. Financial Corporations (a+b) 3,21,520 5,26,016 5,10,516 5,20,613 18,78,666 (a) Banking Sector 2,13,606 8,68,874 4,02,647 3,92,330 18,77,458 of which: i. Commercial Banks 2,08,027 8,75,654 3,89,898 3,82,558 18,56,136 (b) Other Financial Institutions 1,07,914 (3,42,858) 1,07,869 1,28,283 1,208 i. Non-Banking Financial Companies 81,449 59,684 85,032 1,00,836 3,27,001 ii. Housing Finance Companies 23,784 (4,04,294) 21,233 25,853 (3,33,424) iii. Insurance Corporations 2,681 1,753 1,604 1,594 7,631 2. Non-Financial Corporations (Private 34 35 35 35 138 Corporate Business) 3. General Government 116 116 116 116 465 Notes : 1. Net Financial Savings of households refer to the net financial assets, which are measured as difference of financial asset and liabilities flows. 2. Preliminary estimates for 2023-24 and revised estimates for 2021-22 and 2022-23. 3. The preliminary estimates for 2023-24 will undergo revision with the release of first revised estimates of national income, consumption expenditure, savings, and capital formation, 2023-24 by the National Statistical Office (NSO). 4. Non-bank deposits apart from other financial institutions, comprises state power utilities, co-operative non credit societies etc. 5. Figures in the columns may not add up to the total due to rounding off. RBI Bulletin July 2025 153CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Amount in ` Crore) Item Jun-2021 Sep-2021 Dec-2021 Mar-2022 Financial Assets (a+b+c+d+e+f+g+h) 2,33,27,377 2,39,99,280 2,47,08,474 2,54,40,650 Per cent of GDP 110.4 108.9 108.2 107.8 (a) Bank Deposits (i+ii) 1,07,90,832 1,09,87,937 1,14,10,330 1,16,80,355 i. Commercial Banks 99,53,044 1,01,48,486 1,05,66,753 1,08,29,079 ii. Co-operative Banks 8,37,788 8,39,451 8,43,577 8,51,276 (b) Non-Bank Deposits of which: Other Financial Institutions 2,06,509 2,06,074 2,03,896 2,09,665 i. Non-Banking Financial Companies 67,840 66,469 66,542 70,564 ii. Housing Finance Companies 1,38,669 1,39,605 1,37,353 1,39,102 (c) Life Insurance Funds 49,29,725 51,42,279 52,13,527 53,57,350 (d) Currency 27,42,897 26,74,266 27,37,059 28,83,904 (e) Mutual funds 18,55,000 20,64,364 21,26,112 21,52,141 (f) Public Provident Fund (PPF) 7,57,398 7,62,264 7,67,287 8,34,148 (g) Pension Funds 6,16,517 6,67,379 6,99,173 7,36,592 (h) Small Savings (excluding PPF) 14,28,499 14,94,717 15,51,089 15,86,496 Financial Liabilities (a+b) 77,43,630 79,38,456 82,69,633 86,22,079 Per cent of GDP 36.6 36.0 36.2 36.5 Loans/Borrowings (a) Banking Sector 61,80,377 63,19,097 65,87,052 68,61,233 of which: i. Commercial Banks 56,47,239 57,87,508 60,52,779 63,89,789 ii. Co-operative Banks 5,31,728 5,30,164 5,32,833 4,69,989 (b) Other Financial Institutions 15,63,253 16,19,358 16,82,581 17,60,847 of which: i. Non-Banking Financial Companies 7,36,312 7,66,463 7,98,641 8,38,643 ii. Housing Finance Companies 7,21,510 7,45,914 7,75,408 8,1 2,845 iii. Insurance Corporations 1,05,431 1,06,981 1,08,532 1,09,359 154 RBI Bulletin July 2025CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Contd.) (Amount in ` Crore) Item Jun-2022 Sep-2022 Dec-2022 Mar-2023 Financial Assets (a+b+c+d+e+f+g+h) 2,56,21,348 2,64,23,992 2,71,87,716 2,78,44,981 Per cent of GDP 102.8 102.6 103.2 103.3 (a) Bank Deposits (i+ii) 1,18,43,527 1,21,43,060 1,23,99,459 1,27,07,326 i. Commercial Banks 1,09,87,692 1,12,88,257 1,15,36,717 1,18,21,685 ii. Co-operative Banks 8,55,835 8,54,803 8,62,742 8,85,641 (b) Non-Bank Deposits of which: Other Financial Institutions 2,16,170 2,18,247 2,26,328 2,28,562 i. Non-Banking Financial Companies 74,794 78,061 81,308 85,254 ii. Housing Finance Companies 1,41,376 1,40,185 1,45,020 1,43,308 (c) Life Insurance Funds 53,25,967 55,59,682 57,86,593 57,95,431 (d) Currency 29,50,343 28,95,764 29,72,524 31,21,514 (e) Mutual funds 20,48,097 22,60,210 23,55,316 23,67,793 (f) Public Provident Fund (PPF) 8,51,913 8,58,591 8,64,731 9,39,449 (g) Pension Funds 7,44,459 7,96,454 8,53,412 8,98,343 (h) Small Savings (excluding PPF) 16,40,871 16,91,985 17,29,353 17,86,563 Financial Liabilities (a+b) 89,11,861 92,46,741 97,00,657 1,02,17,746 Per cent of GDP 35.8 35.9 36.8 37.9 Loans/Borrowings (a) Banking Sector 70,95,468 73,58,918 77,29,701 81,13,546 of which: i. Commercial Banks 66,20,073 68,81,338 72,49,643 75,80,936 ii. Co-operative Banks 4,73,897 4,76,025 4,78,487 5,30,915 (b) Other Financial Institutions 18,16,393 18,87,823 19,70,956 21,04,201 of which: i. Non-Banking Financial Companies 8,69,175 9,05,825 9,61,617 10,56,182 ii. Housing Finance Companies 8,35,181 8,68,213 8,93,116 9,29,862 iii. Insurance Corporations 1,12,037 1,13,785 1,16,223 1,18,157 RBI Bulletin July 2025 155CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Concld.) (Amount in ` Crore) Item Jun-2023 Sep-2023 Dec-2023 Mar-2024 Financial Assets (a+b+c+d+e+f+g+h) 2,87,56,851 2,96,44,299 3,07,47,010 3,19,86,847 Per cent of GDP 104.6 105.4 106.6 108.3 (a) Bank Deposits (i+ii) 1,29,62,575 1,34,68,783 1,37,48,656 1,41,43,228 i. Commercial Banks 1,20,67,764 1,25,74,464 1,28,57,001 1,32,44,314 ii. Co-operative Banks 8,94,811 8,94,319 8,91,655 8,98,914 (b) Non-Bank Deposits of which: Other Financial Institutions 2,28,077 1,20,095 1,25,432 1,27,257 i. Non-Banking Financial Companies 91,373 96,156 1,01,051 1,02,994 ii. Housing Finance Companies 1,36,703 23,939 24,381 24,263 (c) Life Insurance Funds 60,64,437 62,55,801 65,53,726 67,69,272 (d) Currency 30,72,878 30,36,177 30,92,896 32,39,540 (e) Mutual funds 26,26,046 28,29,859 31,56,299 33,87,208 (f) Public Provident Fund (PPF) 9,55,061 9,60,344 9,64,852 10,51,376 (g) Pension Funds 9,70,016 10,17,975 10,91,276 11,72,651 (h) Small Savings (excluding PPF) 18,77,761 19,55,265 20,13,873 20,96,314 Financial Liabilities (a+b) 1,05,39,266 1,10,65,282 1,15,75,799 1,20,96,412 Per cent of GDP 38.3 39.3 40.2 41.0 Loans/Borrowings (a) Banking Sector 83,27,152 91,96,026 95,98,673 99,91,003 of which: i. Commercial Banks 77,88,962 86,64,616 90,54,514 94,37,072 ii. Co-operative Banks 5,36,409 5,29,528 5,42,241 5,51,852 (b) Other Financial Institutions 22,12,114 18,69,256 19,77,126 21,05,409 of which: i. Non-Banking Financial Companies 11,37,631 11,97,315 12,82,347 13,83,183 ii. Housing Finance Companies 9,53,646 5,49,352 5,70,585 5,96,438 iii. Insurance Corporations 1,20,837 1,22,590 1,24,194 1,25,788 Notes : 1. Data as ratios to GDP have been calculated based on the Provisional Estimates of National Income 2023-24, released by NSO on May 31, 2024. 2. Pension funds comprises funds with the National Pension Scheme. 3. Outstanding deposits with Small Savings are sourced from the Controller General of Accounts, Government of India. 4. Non-bank deposits apart from other financial institutions, comprises state power utilities, co-operative non credit societies etc. Data for outstanding deposits are available only for other financial institutions. 5. Figures in the columns may not add up to the total due to rounding off. 156 RBI Bulletin July 2025CURRENT STATISTICS Explanatory Notes to the Current Statistics Table No. 1 1.2& 6: Annual data are average of months. 3.5 & 3.7: Relate to ratios of increments over financial year so far. 4.1 to 4.4, 4.8,4.9 &5: Relate to the last friday of the month/financial year. 4.5, 4.6 & 4.7: Relate to five major banks on the last Friday of the month/financial year. 4.10 to 4.12: Relate to the last auction day of the month/financial year. 4.13: Relate to last day of the month/ financial year 7.1&7.2: Relate to Foreign trade in US Dollar. Table No. 2 2.1.2: Include paid-up capital, reserve fund and Long-Term Operations Funds. 2.2.2: Include cash, fixed deposits and short-term securities/bonds, e.g., issued by IIFC (UK). Table No. 4 Maturity-wise position of outstanding forward contracts is available at http://nsdp.rbi.org.in under ‘‘Reserves Template’’. Table No. 5 Special refinance facility to Others, i.e. to the EXIM Bank, is closed since March 31, 2013. Table No. 6 For scheduled banks, March-end data pertain to the last reporting Friday. 2.2: Exclude balances held in IMF Account No.1, RBI employees’ provident fund, pension fund, gratuity and superannuation fund. Table Nos. 7 & 11 3.1 in Table 7 and 2.4 in Table 11: Include foreign currency denominated bonds issued by IIFC (UK). Table No. 8 NM and NM do not include FCNR (B) deposits. 2 3 2.4: Consist of paid-up capital and reserves. 2.5: includes other demand and time liabilities of the banking system. Table No. 9 Financial institutions comprise EXIM Bank, SIDBI, NABARD and NHB. L and L are compiled monthly and L quarterly. 1 2 3 Wherever data are not available, the last available data have been repeated. Table No. 13 Data against column Nos. (1), (2) & (3) are Final and for column Nos. (4) & (5) data are Provisional. RBI Bulletin July 2025 157CURRENT STATISTICS Table No. 14 Data in column Nos. (4) & (8) are Provisional. Table No. 17 2.1.1: Exclude reserve fund maintained by co-operative societies with State Co-operative Banks 2.1.2: Exclude borrowings from RBI, SBI, IDBI, NABARD, notified banks and State Governments. 4: Include borrowings from IDBI and NABARD. Table No. 24 Primary Dealers (PDs) include banks undertaking PD business. Table No. 30 Exclude private placement and offer for sale. 1: Exclude bonus shares. 2: Include cumulative convertible preference shares and equi-preference shares. Table No. 32 Exclude investment in foreign currency denominated bonds issued by IIFC (UK), SDRs transferred by Government of India to RBI and foreign currency received under SAARC and ACU currency swap arrangements. Foreign currency assets in US dollar take into account appreciation/depreciation of non-US currencies (such as Euro, Sterling, Yen and Australian Dollar) held in reserves. Foreign exchange holdings are converted into rupees at rupee-US dollar RBI holding rates. Table No. 34 1.1.1.1.2 & 1.1.1.1.1.4: Estimates. 1.1.1.2: Estimates for latest months. ‘Other capital’ pertains to debt transactions between parent and subsidiaries/branches of FDI enterprises. Data may not tally with the BoP data due to lag in reporting. Table No. 35 1.10: Include items such as subscription to journals, maintenance of investment abroad, student loan repayments and credit card payments. Table No. 36 Increase in indices indicates appreciation of rupee and vice versa. For 6-Currency index, base year 2022-23 is a moving one, which gets updated every year. REER figures are based on Consumer Price Index (combined). The details on methodology used for compilation of NEER/REER indices are available in December 2005, April 2014 and January 2021 issues of the RBI Bulletin. Table No. 37 Based on applications for ECB/Foreign Currency Convertible Bonds (FCCBs) which have been allotted loan registration number during the period. 158 RBI Bulletin July 2025CURRENT STATISTICS Table Nos. 38, 39, 40 & 41 Explanatory notes on these tables are available in December issue of RBI Bulletin, 2012. Table No. 43 Part I-A. Settlement systems 1.1.3: Tri- party Repo under the securities segment has been operationalised from November 05, 2018. Part I-B. Payments systems 4.1.2: ‘Others’ includes e-commerce transactions and digital bill payments through ATMs, etc. 4.2.2: ‘Others’ includes e-commerce transactions, card to card transfers and digital bill payments through ATMs, etc. 5: Available from December 2010. 5.1: includes purchase of goods and services and fund transfer through wallets. 5.2.2: includes usage of PPI Cards for online transactions and other transactions. 6.1: Pertain to three grids – Mumbai, New Delhi and Chennai. 6.2: ‘Others’ comprises of Non-MICR transactions which pertains to clearing houses managed by 21 banks. Part II-A. Other payment channels 1: Mobile Payments – Include transactions done through mobile apps of banks and UPI apps. o The data from July 2017 includes only individual payments and corporate payments initiated, o processed, and authorised using mobile device. Other corporate payments which are not initiated, processed, and authorised using mobile device are excluded. 2: Internet Payments – includes only e-commerce transactions through ‘netbanking’ and any financial transaction using internet banking website of the bank. Part II-B. ATMs 3.3 and 4.2: only relates to transactions using bank issued PPIs. Part III. Payment systems infrastructure 3: Includes ATMs deployed by Scheduled Commercial Banks (SCBs) and White Label ATM Operators (WLAOs). WLAs are included from April 2014 onwards. Table No. 45 (-) represents nil or negligible The table format is revised since monthly Bulletin for the month of June 2023. Central Government Dated Securities include special securities and Sovereign Gold Bonds. State Government Securities include special bonds issued under Ujwal DISCOM Assurance Yojana (UDAY). Bank PDs are clubbed under Commercial Banks. The category ‘Others’ comprises State Governments, DICGC, PSUs, Trusts, Foreign Central Banks, HUF/ Individuals etc. Data since September 2023 includes the impact of the merger of a non-bank with a bank. RBI Bulletin July 2025 159CURRENT STATISTICS Table No. 46 GDP data is based on 2011-12 base. GDP for 2023-24 is from Union Budget 2023-24. Data pertains to all States and Union Territories. 1 & 2: Data are net of repayments of the Central Government (including repayments to the NSSF) and State Governments. 1.3: Represents compensation and assignments by States to local bodies and Panchayati Raj institutions. 2: Data are net of variation in cash balances of the Central and State Governments and includes borrowing receipts of the Central and State Governments. 3A.1.1: Data as per RBI records. 3B.1.1: Borrowings through dated securities. 3B.1.2: Represent net investment in Central and State Governments’ special securities by the National Small Savings Fund (NSSF). This data may vary from previous publications due to adjustments across components with availability of new data. 3B.1.6: Include Ways and Means Advances by the Centre to the State Governments. 3B.1.7: Include Treasury Bills, loans from financial institutions, insurance and pension funds, remittances, cash balance investment account. Table No. 47 SDF is availed by State Governments against the collateral of Consolidated Sinking Fund (CSF), Guarantee Redemption Fund (GRF) & Auction Treasury Bills (ATBs) balances and other investments in government securities. WMA is advance by Reserve Bank of India to State Governments for meeting temporary cash mismatches. OD is advanced to State Governments beyond their WMA limits. Average amount Availed is the total accommodation (SDF/WMA/OD) availed divided by number of days for which accommodation was extended during the month. - : Nil. Table No. 48 CSF and GRF are reserve funds maintained by some State Governments with the Reserve Bank of India. ATBs include Treasury bills of 91 days, 182 days and 364 days invested by State Governments in the primary market. --: Not Applicable (not a member of the scheme). The concepts and methodologies for Current Statistics are available in Comprehensive Guide for Current Statistics of the RBI Monthly Bulletin (https://rbi.org.in/Scripts/PublicationsView.aspx?id=17618) Time series data of ‘Current Statistics’ is available at https://data.rbi.org.in. Detailed explanatory notes are available in the relevant press releases issued by RBI and other publications/releases of the Bank such as Handbook of Statistics on the Indian Economy. 160 RBI Bulletin July 2025RREECCEENNTT PPUUBBLLIICCAATTIIOONNSS Recent Publications of the Reserve Bank of India Name of Publication Price India Abroad 1. Reserve Bank of India Bulletin2025 `350 per copy US$ 15 per copy `250 per copy (concessional rate*) US$ 150 (one-year subscription) `4,000 (one year subscription) (inclusive of air mail courier charges) `3,000 (one year concessional rate*) 2. Handbook of Statistics on theIndian `550 (Normal) US$ 24 States 2023-24 `600 (inclusive of postage) (inclusive of air mail courier charges) 3. Handbook of Statistics on theIndian `600 (Normal) US$ 50 Economy 2023-24 `650 (inclusive of postage) (inclusive of air mail courier charges) `450 (concessional) `500 (concessional with postage) 4. State Finances - `600 per copy (over the counter) US$ 24 per copy A Study of Budgets of 2024-25 `650 per copy (inclusive of postal charges) (inclusive of air mail courier charges) 5. Report on Currency and Finance `575 per copy (over the counter) US$ 22 per copy 2023-24 `625 per copy (inclusive of postal charges) (inclusive of air mail courier charges) 6. Reserve Bank of India `200 per copy (over the counter) US$ 18 per copy Occasional Papers Vol. 45, No. 1, 2024 `250 per copy (inclusive of postal charges) (inclusive of air mail courier charges) 7. Finances of Panchayati Raj Institutions `300 per copy (over the counter) US$ 16 per copy `350 per copy (inclusive of postal charges) (inclusive of air mail courier charges) 8. Report on Trend and Progress of Issued as Supplement to RBI Bulletin Banking in India 2023-24 January, 2025 9. Annual Report 2024-25 Issued as Supplement to RBI Bulletin June, 2025 10. Financial Stability Report, Issued as Supplement to RBI Bulletin June 2025 July, 2025 11. Monetary Policy Report - April 2025 Included in RBI Bulletin April 2025 12. Report on Municipal Finances - `300 per copy (over the counter) US$ 16 per copy November 2024 `350 per copy (inclusive of postal charges) (inclusive of air mail courier charges) 13. Banking Glossary (English-Hindi) `100 per copy (over the counter) `150 per copy (inclusive of postal charges) Notes 1. Many of the above publications are available at the RBI website (www.rbi.org.in). 2. Time Series data are available at the Database on Indian Economy (https://data.rbi.org.in). 3. The Reserve Bank of India History 1935-2008 (5 Volumes) are available at leading book stores in India. * Concession is available for students, teachers/lecturers, academic/education institutions, public libraries and Booksellers in India provided the proof of eligibility is submitted. RBI Bulletin July 2025 161RREECCEENNTT PPUUBBLLIICCAATTIIOONNSS General Instructions 1. All communications should be addressed to: Director, Division of Reports and Knowledge Dissemination, Department of Economic and Policy Research (DRKD, DEPR), Reserve Bank of India, Amar Building, Ground Floor, Sir P. M. Road, Fort, P. B. No.1036, Mumbai - 400 001. Telephone: 022- 2260 3000 Extn: 4002, Email: spsdepr@rbi.org.in. 2. Publications are available for sale between 10:30 am to 3:00 pm (Monday to Friday). 3. Publications will not be supplied on a cash-on-delivery basis. 4. Publications once sold will not be taken back. 5. Back issues of the publication are generally not available. 6. Wherever concessional price is not indicated, a discount of 25 per cent is available for students, faculty, academic/education institutions, public libraries, and book sellers in India provided the proof of eligibility is submitted. 7. Subscription should be made preferably by NEFT and transaction details including payer’s name, subscription number (if any), account number, date and amount should be emailed to spsdepr@rbi.org.in, or sent by post. a. Details required for NEFT transfer are as follows: Beneficiary Name Department of Economic and Policy Research, RBI Name of the Bank Reserve Bank of India Branch and address Fort, Mumbai IFSC of Bank Branch RBIS0MBPA04 Type of Account Current Account Account Number 41-8024129-19 b. In case of subscription through non-digital modes, please send the demand draft/cheque payable at Mumbai in favour of Reserve Bank of India, Mumbai. 8. Complaints regarding ‘non-receipt of publication’ may be sent within a period of two months. 162 RBI Bulletin July 2025