RBI Bulletin - Oct 20, 2025

OCTOBER 2025 VOLUME LXXIX NUMBER 10Editorial Committee Sanjay Kumar Hansda 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 acknowledgement 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 Monetary Policy Statement (Sep 29 – Oct 1, 2025) Governor’s Statement: October 1, 2025 1 Resolution of the Monetary Policy Committee (MPC) Sep 29 to Oct 1, 2025 7 Statement on Developmental and Regulatory Policies 11 Monetary Policy Report – October 2025 17 Speeches Opening Remarks at the High-Level Dialogue on Forging Economic Resilience through Digital Public Platforms Shri Sanjay Malhotra 119 Driving Inclusive and Sustainable Growth Through Digital Public Infrastructure and FinTech Shri Sanjay Malhotra 123 Responsible Artificial Intelligence (AI) – Balancing Innovation with Financial Stability Shri T Rabi Sankar 129 Inclusion is Innovation’s Highest Purpose: Lessons from India Shri Swaminathan J. 135 Transforming Public Sector Banks for a Viksit Bharat Shri Swaminathan J. 139 Articles State of the Economy 143 Resilience and Revival: India’s Private Corporate Sector 173 Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments 191 Compliance to Confidence: A Data Quality Model for Central Banks 209 Steel Under Siege: Understanding the Impact of Dumping on India 221 Current Statistics 229 Recent Publications 283MONETARY POLICY STATEMENT (SEPTEMBER 29-OCTOBER 1) 2025-26 Governor’s StatementGovernor’s Statement MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 Governor’s Statement* and the outlook, the MPC voted unanimously to keep the policy repo rate unchanged at 5.50 per cent; Sanjay Malhotra consequently, the standing deposit facility (SDF) rate remains at 5.25 per cent while the marginal standing Namaskar. Greetings on the last day of Navaratri, facility (MSF) rate and the Bank Rate remain at 5.75 per cent. The MPC also decided to continue with the and my best wishes for a Happy Dussehra and Gandhi neutral stance. Jayanti tomorrow. I shall now briefly set out the rationale for these Since the August policy meeting, significant decisions. The MPC observed that the overall inflation developments on the domestic front amidst a fast- outlook has turned even more benign in the last few changing global economic landscape have altered months, due to a sharp decline in food prices and the the narrative on growth-inflation dynamics in India. rationalisation of GST rates. The average headline Buoyed by a good monsoon, the Indian economy inflation for 2025-26 has been revised lower from 3.7 continues to exhibit strength by registering a higher per cent projected in June and 3.1 per cent in August, growth in Q1:2025-26. At the same time, there has to 2.6 per cent. Headline inflation for Q4:2025-26 and been a considerable moderation in headline inflation. Q1:2026-27 too have been revised downwards and are The rationalisation of the goods and services tax (GST) broadly aligned with the target, despite unfavourable rates is likely to have a sobering impact on inflation base effects. Core inflation for this year and Q1:2026- while stimulating consumption and growth. Tariffs on 27 is also expected to remain contained. the other hand will moderate exports. The MPC also noted that growth outlook remains As for the global economy, it has been more resilient supported by domestic drivers, despite resilient than anticipated, with robust growth in the weak external demand. It is likely to get further US and China. The outlook, however, remains clouded support from a favourable monsoon, lower inflation, amidst elevated policy uncertainty. Inflation has monetary easing and the salubrious impact of recent remained above respective targets in some advanced GST reforms. However, growth continues to be below economies, posing fresh challenges for central our aspirations. Even though the growth projection for banks as they navigate the shifting growth–inflation the current financial year is being revised upwards, dynamics. Financial markets have been volatile. The the forward-looking projections for Q3 and beyond are US dollar strengthened after the upward revision expected to be slightly lower than projected earlier, of US growth numbers for the second quarter, and primarily due to trade related headwinds, despite treasury yields hardened recently as expectations being partially offset by the impetus provided by the of rate cuts by the Federal Reserve ebbed. Equities rationalisation of GST rates. have remained buoyant across several advanced and Summarising, the MPC concluded that there has emerging economies. been a significant moderation in inflation. Moreover, Decisions of the Monetary Policy Committee (MPC) the prevailing global uncertainties and tariff related developments are likely to decelerate growth in The Monetary Policy Committee (MPC) met on the H2:2025-26 and beyond. The current macroeconomic 29th, 30th of September and 1st October to deliberate conditions and the outlook has opened up policy space and decide on the policy repo rate. After a detailed for further supporting growth. However, the MPC assessment of the evolving macroeconomic conditions noted that the impact of the front-loaded monetary * Governor’s Statement - October 1, 2025. policy actions and the recent fiscal measures is still RBI Bulletin October 2025 1MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 Governor’s Statement playing out. The trade related uncertainties are also uncertainties will impact external demand. Prolonged unfolding. The MPC, therefore, considered it prudent geopolitical tensions and volatility in international to wait for the impact of policy actions to play out financial markets caused by risk-off sentiments of and greater clarity to emerge before charting the next investors pose downside risks to the growth outlook. course of action. Accordingly, the MPC unanimously The implementation of several growth-inducing voted to keep the policy repo rate unchanged at 5.5 structural reforms, including streamlining of GST per cent and decided to retain the stance at neutral. are expected to offset some of the adverse effects of the external headwinds. Taking all these factors into Assessment of Growth and Inflation account, real GDP growth for 2025-26 is now projected Growth at 6.8 per cent, with Q2 at 7.0 per cent, Q3 at 6.4 per cent, and Q4 at 6.2 per cent. Real GDP growth for Economic activity has remained resilient with Q1:2026-27 is projected at 6.4 per cent. The risks are growth of real gross domestic product (GDP) surprising evenly balanced. on the upside at 7.8 per cent and gross value added (GVA) at 7.6 per cent for Q1: 2025-26.1 As suggested Inflation by high frequency indicators available so far, domestic Inflation conditions remained benign during economic activity continues to sustain momentum in 2025-26 so far with actual outcomes turning out Q2:2025-26.2 to be significantly lower than projections.3 Low Looking ahead, an above normal monsoon, good inflation is primarily attributed to a sharp fall in food progress of kharif sowing and adequate reservoir levels inflation,4 aided by improved supply prospects and have further brightened prospects of agriculture and measures by the government to effectively manage rural demand. Buoyancy in services sector coupled the supply chain.5 Core inflation6 remained largely with steady employment conditions are supportive of contained with the August reading at 4.2 per cent, demand, which is expected to get a further boost from despite continued price pressures on precious metals.7 the rationalisation of GST. Rising capacity utilisation, Turning to the inflation outlook, the progress conducive financial conditions, and improving of the southwest monsoon has been satisfactory. domestic demand should continue to facilitate fixed Healthy kharif sowing,8 adequate reservoir levels9 and investment. However, ongoing tariff and trade policy 3 The actual outcome for Q1 and projection for Q2 of 2025-26 turned out 1 During Q1:2025-26, private final consumption, government to be lower by 90 bps and 210 bps, respectively, than what was set out in consumption, and gross fixed capital formation (GFCF) grew by 7.0 per April policy, primarily on account of the faster than expected decline in cent, 7.4 per cent, and 7.8 per cent, respectively. Real GVA of agriculture, food inflation. Core inflation largely evolved as projected. manufacturing and services posted a growth of 3.7 per cent, 7.7 per cent 4 Food group registered a deflation of -0.8 per cent in July (lowest since and 9.0 per cent, respectively, in Q1. January 2019), before closing with zero inflation in August 2025. 2 Tractor and two-wheelers sales grew robustly by 17.3 per cent and 7.9 5 Within food group, deflation was observed in prices of vegetables (-15.9 per cent, respectively, during July-August 2025. According to NielsenIQ, per cent), pulses (-14.5 per cent), and spices (-3.2 per cent) in August. FMCG sales volume increased by 8.3 per cent and 4.1 per cent, respectively, Decline in inflation within cereals sub-group to 2.7 per cent in August in rural and urban areas during July-August 2025. Domestic air passenger 2025 as compared with 7.3 per cent a year ago also contributed to the traffic contracted by 1.7 per cent during this period. Consumption of overall moderation in food inflation. finished steel and production of cement increased by 8.7 per cent and 8.8 6 CPI headline excluding food and fuel. per cent, respectively in July-August 2025. Domestic production of capital 7 Core excluding gold and silver recorded a y-o-y inflation on 3.0 per cent goods expanded at 5.6 per cent in July-August 2025 following a strong in August 2025. growth during Q1:2025-26 at 9.8 per cent, while imports of capital gods 8 As on September 19, 2025, the area sown under kharif crops stood at expanded by 5.4 per cent during July-August. Manufacturing PMI surged 11.2 crore hectares, 2.2 per cent over higher than the normal sowing area to a 17.5-year high of 59.3 in August, along with strong business optimism. for the season. Services PMI reached a 15-year high of 62.9 in August 2025, led by rising 9 As of September 25, 2025, reservoir levels stood at 90 per cent of total new orders. capacity, exceeding the levels recorded a year ago and the decadal average. 2 RBI Bulletin October 2025Governor’s Statement MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 comfortable buffer stocks of food-grains10 should outflows of US$ 3.9 billion in 2025-26 so far (April keep food prices benign. The recently implemented 01-September 29) due to outflows in both equity GST rate rationalisation would lead to a reduction in and debt segments.14 As on September 26, 2025, prices of several items in the CPI basket. Overall, the India’s foreign exchange reserves stood at US$ 700.2 inflation outcome is likely to be softer than what was billion, sufficient to cover more than 11 months of projected in August, primarily on account of the GST merchandise imports.15 Overall, India’s external sector rate cuts and benign food prices. Considering all these continues to be resilient, and we remain confident of factors, CPI inflation for 2025-26 is now projected at meeting our external obligations comfortably.16 2.6 per cent with Q2 at 1.8 per cent; Q3 at 1.8 per cent; Notwithstanding the robust domestic and Q4 at 4.0 per cent. CPI inflation for Q1:2026-27 is macroeconomic fundamentals, the INR has witnessed projected at 4.5 per cent The risks are evenly balanced. some depreciation accompanied by phases of volatility. External Sector RBI is keeping a close watch on movements of the INR and will take appropriate steps, as warranted. India’s current account deficit moderated to US$ 2.4 billion (0.2 per cent of GDP) in Q1:2025-26 as Liquidity and Financial Market Conditions compared with US$ 8.6 billion (0.9 per cent of GDP) in System liquidity, as measured by the net position Q1:2024-25 due to increased net services surplus and under the Liquidity Adjustment Facility (LAF), stood strong remittance receipts despite higher merchandise at an average daily surplus of ₹2.1 lakh crore since trade deficit.11 During July-August 2025, merchandise the last MPC meeting in August 2025.17 Going ahead, trade deficit continued to remain elevated. the drawdown of government cash balances and the Notwithstanding rising global trade uncertainties, remaining 75 basis points cut in the cash reserve India’s services exports, driven by software and ratio (CRR) during October-November will aid banking business services, witnessed robust growth in July- system liquidity in the near-term. Through our two- August 2025.12 Furthermore, robust services exports way operations, we will actively manage liquidity to coupled with strong remittance receipts is expected anchor short-term rates. to keep the current account deficit (CAD) sustainable Money market rates have remained relatively during 2025-26. stable amidst comfortable liquidity conditions.18 On the external financing side, net foreign direct 14 During April-September 2025 (till September 29), there were net investment reached a 38-month high in July 2025, outflows of US$ 3.3 billion and US$ 0.6 billion in equity and debt segments, driven by increased gross foreign direct investment respectively. and a moderation in repatriation and outward foreign 15 Based on actual merchandise imports (on a BoP basis) during the four quarters period (Q2:2024-25 to Q1:2025-26), sufficient to cover around direct investment.13 However, net FPI recorded nine months of imports of goods and services combined and around 94 per cent of total external debt as on end-June 2025. 10 As on September 16, 2025, the Food Corporation of India’s wheat stocks 16 India’s CAD/GDP ratio moderated to 0.6 per cent in 2024-25 from 0.7 were 1.2 times the buffer norms (highest in last 4 years) while rice stocks per cent during 2023-24. India’s external debt to GDP ratio moderated to were 3.5 times the buffer norms. 18.9 per cent at end-June 2025 from 19.1 per cent at end-March 2025. The 11 In this context, it is pertinent to inform that we have reduced the time net International Investment position to GDP ratio improved to (-) 8.0 per lag of releasing the quarterly balance of payments data and press release cent from (-) 8.6 per cent during the same period. from 90 days to 60 days. 17 The average daily net absorption under the liquidity adjustment facility 12 As per provisional figures, India’s services exports grew by 6.5 per cent (LAF) during June and July stood at ₹2.8 lakh crore and ₹3.1 lakh crore, during July-August 2025, while services imports increased by 1.5 per cent respectively. The average daily net absorption under the LAF declined to during this period. Net services exports grew by 12.2 per cent during July- ₹2.9 lakh crore in August 2025 and ₹1.6 lakh crore in September 2025 (up August 2025. to 29th). 13 Gross foreign direct investment (FDI) inflows grew by 33.2 per cent to 18 In response to the cumulative policy repo rate cut of 100 basis points US$ 37.7 billion in April-July 2025-26 from US$ 28.3 billion during the same (bps) in the current easing cycle (up to September 29), the WACR, the period a year ago. Net FDI inflows increased by more than 200 per cent to 3-month T-bill rate, the 3-month CP issued by NBFCs, and the 3-month US$ 10.8 billion in April-July 2025-26 from US$ 3.5 billion a year ago. CD rate declined by 92 bps, 105 bps, 118 bps, and 147 bps, respectively. RBI Bulletin October 2025 3MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 Governor’s Statement During February-August 2025, in response to the steadily increasing their footprint, it is the overall flow 100-basis points (bps) cut in the policy repo rate, the of financial resources to the economy that is more weighted average lending rate (WALR) of Scheduled pertinent for assessing flow of funds to the productive Commercial Banks moderated by 58 bps for fresh sectors. The total flow of resources from non-bank rupee loans; 71 bps is on account of interest rate effect. sources to the commercial sector increased by ₹2.66 The moderation for outstanding rupee loans is to the lakh crore in 2025-26 so far, more than offsetting the extent of 55 bps. On the deposit side, the weighted decline in non-food bank credit by ₹0.48 lakh crore).22 average domestic term deposit rate (WADTDR) on Additional Measures fresh deposits declined by 106 bps, while that on I shall now announce a package of twenty outstanding deposits softened by 22 bps over the two additional measures aimed at strengthening same period. Transmission has been broad-based the resilience and competitiveness of the banking across sectors. Going forward, adequate liquidity in sector, improving the flow of credit, promoting ease the system and the remaining CRR cuts will further of doing business, simplifying foreign exchange facilitate monetary transmission. management, enhancing consumer satisfaction, and Financial Stability internationalisation of Indian Rupee. The system-level financial parameters related Strengthening the resilience and competitiveness of to capital adequacy, liquidity, asset quality and the banking sector profitability of the Scheduled Commercial Banks (SCBs) continue to remain healthy.19 Similarly, the There are four measures for strengthening the system-level parameters of NBFCs too are sound, with resilience and competitiveness of the Indian banks. adequate capital and improved GNPA ratios20. The Expected Credit Loss (ECL) framework of Bank credit growth, despite being lower than last provisioning with prudential floors is proposed to be year, continues to be healthy and supportive of real made applicable to all Scheduled Commercial Banks economic activity.21 I would like to emphasise here (excluding Small Finance Banks (SFBs), Payment that, as other sources of funding are gradually but Banks (PBs), Regional Rural Banks(RRBs)) and All India Financial Institutions (AIFIs) with effect from 1st 19 SCB Parameters: The outstanding credit and deposit increased by 10.4 April 2027. per cent and 11.3 per cent on a y-o-y basis, respectively, between June-24 and June-25. The system-level Capital to Risk Weighted Assets Ratio (CRAR) They will be given a glide path (till March 31, of 17.54 per cent in June 2025 was well above the regulatory minimum level. Ratio of non-performing loans improved further (GNPA ratio at 2.22 2031) to smoothen the one-time impact of higher per cent in June 2025 vis-à-vis 2.67 per cent in June 2024, NNPA Ratio at 0.51 per cent in June 2025 vis-à-vis 0.60 per cent in June 2024). Liquidity provisioning, if any, on their existing books. buffers were robust, with an LCR of 132.69 per cent as of end June 2025. The annualised return on assets (RoA) and return on equity (RoE) stood at Further, it is proposed to make the revised Basel 1.30 per cent and 13.02 per cent, respectively, in June 2025. Net Interest III capital adequacy norms effective for commercial Margin was 3.25 per cent for June 2025 (3.54 per cent in June 2024). 20 NBFC Parameters: Total CRAR of NBFCs was 25.69 per cent and Tier I banks (excluding SFBs, PBs and RRBs) from 1st April CRAR was 23.78 per cent in June 2025, well above the minimum regulatory 2027. requirements. GNPA ratio has improved from 2.54 per cent in June 2024 to 2.23 per cent in June 2025, while NNPA ratio also improved from 1.07 In furtherance of this, a draft of the Standardised per cent in June 2024 to 0.98 per cent in June 2025. RoA for the sector decreased slightly from 2.66 per cent in June 2024 to 2.64 per cent in June Approach for Credit Risk shall be issued shortly. Under 2025. NIM has slightly decreased from 4.85% in June 2024 to 4.50% in June 2025. 22 Among the non-bank sources, issuances of corporate bonds by non- 21 Non-food bank credit recorded a year-on-year (y-o-y) growth of 10.2 per financial entities increased by ₹1.66 lakh crore while net inward FDI cent as on September 5, 2025, compared to 13.3 per cent a year ago. increased by ₹0.93 lakh crore. 4 RBI Bulletin October 2025Governor’s Statement MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 the revised approach, the proposed lower risk weights from Rs. 20 lakh to Rs. 1 crore and for IPO financing on certain segments are expected to reduce the overall from Rs. 10 lakh to Rs. 25 lakh per person. capital requirements, particularly for MSMEs and Three, it is proposed to withdraw the framework residential real estate (including home loans). introduced in 2016 that disincentivized lending by It may be recalled that capital requirements for banks to specified borrowers (with credit limit from operational risk have already been finalised (in 2023) banking system of Rs.10,000 crore and above). whereas the capital requirements for market risk are While the Large Exposure Framework since put under finalisation after receipt of comments from the in place for banks addresses credit concentration risk public. to a particular entity or group at an individual bank- These measures will help align our guidelines level, concentration risk at the banking system level, with international standards adapted to our national as and when considered necessary, will be managed conditions and priorities, and strengthen the capital through specific macroprudential tools. adequacy framework for banks and AIFIs. Four, to reduce the cost of infrastructure financing A draft circular on Forms of Business and Prudential by NBFCs, it is proposed to reduce the risk weights Regulation for Investments was issued in October, applicable to lending by NBFCs to operational, high 2024. It has been finalised after public consultations quality infrastructure projects. and will be issued shortly. The proposed regulatory Five, since 2004, licensing for Urban Co-operative restriction on overlap in the businesses undertaken Banks (UCBs) had been paused. Considering the by a bank and its group entity(ies) is being removed from the final guidelines. The strategic allocation of positive developments in the sector during the last business streams among group entities will be left to two decades and in response to the growing demand the wisdom of Bank Boards. from the stakeholders, we propose to publish a discussion paper on licensing of new UCBs. It is further proposed to introduce risk-based deposit insurance premium with the currently Promoting Ease of Doing Business applicable flat rate of premium as the ceiling. I now come to measures related to EoDB. We This will incentivise sound risk management by have seven announcements including those related to banks and reduce premium to be paid by better rated FEMA. banks. First, a large number of circulars and directions Improving the flow of credit totalling about 9000, have been consolidated, subject I will announce five measures to improve flow of wise, across 11 types of regulated entities. Drafts of the credit. same shall be issued shortly for public consultation. One, to expand the scope of capital market Second, it is proposed to provide greater flexibility lending by banks, it is proposed to provide an enabling to banks for opening and maintaining transaction framework for Indian banks to finance acquisitions by accounts of borrowers (viz. current accounts and CC/ Indian corporates. OD accounts). This will particularly help borrowers Two, it is proposed to (a) remove the regulatory which are regulated by a financial sector regulator. ceiling on lending against listed debt securities and Restrictions with respect to collection accounts are (b) enhance limits for lending by banks against shares also proposed to be withdrawn. RBI Bulletin October 2025 5MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 Governor’s Statement The export sector is a vital part of India’s economy. Internationalising Indian Rupee To further strengthen the sector and enhance ease of We have been making steady progress in the doing business, we shall: use of Indian Rupee for international trade. Three • extend the time period for repatriation from measures are proposed in this regard: foreign currency accounts of Indian exporters • First, permit AD banks to lend in Indian in IFSC, from one month to three months. Rupees to non-residents from Bhutan, Nepal and Sri Lanka for cross border trade • increase the period for forex outlay for transactions. Merchanting Trade transactions, from four • Second, establish transparent reference months to six months; and rates for currencies of India’s major trading • simplify the process of reconciliation of partners to facilitate INR based transactions. outstanding entries related to exports and • Third, permit wider use of SRVA balances imports in the respective reporting portals by making them eligible for investment in (EDPMS/IDPMS). corporate bonds and commercial papers. Simplifying foreign exchange management Concluding Remarks Sixth, key provisions relating to eligible Let me now conclude. Despite an external borrowers, recognised lenders, limits on borrowing, environment that has deteriorated since the August cost of borrowing, end-use and reporting, etc. in ECB policy, the Indian economy remains poised to register regulations, issued under FEMA, are proposed to be high growth. The sobering of inflation has given rationalised. greater leeway for monetary policy to support growth without compromising on the primary mandate of Seventh, it is proposed to rationalise FEMA price stability. However, the MPC decided to wait for regulations regarding non-residents establishing their the cumulative impact of recent policy actions to play business presence in India. out before charting the next course of action. Enhancing consumer satisfaction As India strives towards achieving Viksit Bharat I shall now state three consumer centric proposals: by the centenary year of its independence, it would need the coordinated support of fiscal, monetary, One, the bouquet of services offered to Basic regulatory and other public policies to attain its Savings Bank Deposit account holders without levy of goal. The recent rationalisation of GST rates by the minimum balance charges is proposed to be expanded Government is a major step in this direction. Our to, inter alia, include digital banking (mobile/internet various policy announcements today will also support banking) services. the achievement of this goal. In terms of monetary Two, the Internal Ombudsman mechanism policy actions, we will remain vigilant of the incoming is proposed to be strengthened to make grievance data and stay focussed on our objective of maintaining redressal by regulated entities more effective. price stability while supporting growth. In pursuit of this objective, we will be proactive, objective and Three, the RBI Ombudsman Scheme is also being consistent in our communication while backing it up revised for improved grievance redressal and rural with credible actions. cooperative banks are being included under the ambit of the Scheme. Thank you. Namaskar and Jai Hind. 6 RBI Bulletin October 2025MONETARY POLICY STATEMENT (SEPTEMBER 29-OCTOBER 1) 2025-26 Resolution of the Monetary Policy Committee (MPC) (September 29-October 1) 2025-26Monetary Policy Statement, 2025-26 MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 Monetary Policy Statement, In India, real gross domestic product (GDP), driven by strong private consumption and fixed 2025-26 Resolution of the investment, recorded a robust growth of 7.8 per cent Monetary Policy Committee (MPC) in Q1:2025-26. On the supply side, growth in gross value added (GVA) at 7.6 per cent was led by a revival September 29 to October 1, 2025* in manufacturing and steady expansion in services. Available high frequency indicators suggest that Monetary Policy Decisions economic activity continues to remain resilient. Rural The Monetary Policy Committee (MPC) held its demand remains strong, riding on a good monsoon 57th meeting from September 29 to October 1, 2025, and robust agriculture activity, while urban demand under the chairmanship of Shri Sanjay Malhotra, is showing a gradual revival. Revenue expenditure of Governor, Reserve Bank of India. The MPC members the Union and State Governments registered robust Dr. Nagesh Kumar, Shri Saugata Bhattacharya, Prof. growth during the fiscal year so far (April-July). Ram Singh, Dr. Poonam Gupta and Shri Indranil Investment activity, as suggested by healthy growth Bhattacharyya attended the meeting. in construction indicators i.e., cement production and steel consumption in July-August, is holding up After a detailed assessment of the evolving well even though production and import of capital macroeconomic and financial developments and the goods witnessed some moderation. Recovery in outlook, the MPC voted unanimously to keep the manufacturing sector continues while services activity policy repo rate under the liquidity adjustment facility is sustaining its momentum. (LAF) unchanged at 5.50 per cent; consequently, the standing deposit facility (SDF) rate remains at 5.25 per Looking ahead, an above normal monsoon, cent while the marginal standing facility (MSF) rate good progress of kharif sowing and adequate and the Bank Rate remains at 5.75 per cent. The MPC reservoir levels have further brightened prospects of also decided to continue with the neutral stance. agriculture and rural demand. Buoyancy in services sector coupled with steady employment conditions Growth and Inflation Outlook are supportive of demand, which is expected to get The global economy has been more resilient than a further boost from the rationalisation of goods and anticipated in 2025, with robust growth in the US and services tax (GST) rates. Rising capacity utilisation, China. The outlook, however, remains clouded amidst conducive financial conditions, and improving elevated policy uncertainty. Inflation has remained domestic demand should continue to facilitate fixed above their respective targets in some advanced investment. However, ongoing tariff and trade policy economies, posing fresh challenges for central banks as uncertainties will impact external demand for goods they navigate the shifting growth-inflation dynamics. and services. Prolonged geopolitical tensions and Financial markets have been volatile. The US dollar volatility in international financial markets caused by strengthened after the upward revision of US growth risk-off sentiments of investors also pose downside numbers for the second quarter, and treasury yields risks to the growth outlook. The implementation of hardened recently tracking changes in policy rate several growth-inducing structural reforms, including expectations. Equities have remained buoyant across streamlining of GST are expected to offset some of the several advanced and emerging market economies. adverse effects of the external headwinds. Taking all * Released on October 1, 2025. these factors into account, real GDP growth for 2025- RBI Bulletin October 2025 7MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 Monetary Policy Statement, 2025-26 26 is now projected at 6.8 per cent, with Q2 at 7.0 per what was projected in the August MPC resolution, cent, Q3 at 6.4 per cent, and Q4 at 6.2 per cent. Real primarily on account of the GST rate cuts and benign GDP growth for Q1:2026-27 is projected at 6.4 per cent food prices. Despite the anticipation of moderate (Chart 1). The risks are evenly balanced. momentum during H2, large unfavourable base effects are likely to exert upward pressure on headline Headline CPI inflation declined to its eight-year CPI inflation, especially in Q4. Considering all these low of 1.6 per cent (y-o-y) in July 2025 before rising factors, CPI inflation for 2025-26 is now projected at to 2.1 per cent in August – its first increase after nine 2.6 per cent with Q2 at 1.8 per cent; Q3 at 1.8 per cent; months. Benign inflation conditions during 2025-26 and Q4 at 4.0 per cent. CPI inflation for Q1:2026-27 so far have been primarily driven by a sharp decline in is projected at 4.5 per cent (Chart 2). The risks are food inflation from its peak of October 2024. Inflation evenly balanced. within the fuel group moved in a narrow range of 2.4-2.7 per cent during June-August. Core inflation Rationale for Monetary Policy Decisions remained largely contained at 4.2 per cent in August. The MPC observed that the overall inflation Excluding precious metals, core inflation was at 3.0 outlook has turned even more benign in the last few per cent in August. months, due to the reasons discussed above. The In terms of the inflation outlook for H2: 2025- average headline inflation for 2025-26 is now revised 26, healthy progress of the south-west monsoon, lower from 3.7 per cent and 3.1 per cent projected in higher kharif sowing, adequate reservoir levels and June and August policy, respectively, to 2.6 per cent. comfortable buffer stock of foodgrains should keep Headline inflation for Q4:2025-26 and Q1:2026-27 too food prices benign. The recently implemented GST have been revised downwards and are broadly aligned rate rationalisation would lead to a reduction in with the target, despite unfavourable base effects. prices of several items in the CPI basket. Overall, Core inflation for this year and Q1:2026-27 is also the inflation outcome is likely to be softer than expected to remain contained. 8 RBI Bulletin October 2025Monetary Policy Statement, 2025-26 MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 Growth outlook remains resilient supported by the outlook has opened up policy space for further domestic drivers, despite weak external demand. supporting growth. However, the MPC noted that the It is likely to get further support from a favourable impact of the front-loaded monetary policy actions monsoon, lower inflation, monetary easing and the and the recent fiscal measures is still playing out. The salubrious impact of recent GST reforms. However, trade related uncertainties are also unfolding. The growth continues to be below our aspirations. Even MPC, therefore, considered it prudent to wait for the though the growth projection for the financial year impact of policy actions to play out and greater clarity 2025-26 is being revised upwards, the forward-looking to emerge before charting the next course of action. projections for Q3 and beyond are expected to be Accordingly, the MPC unanimously voted to keep the slightly lower than projected earlier, primarily due to policy repo rate unchanged at 5.5 per cent. The MPC also decided to retain the stance at neutral. However, tariff-related developments, despite being partially two members - Dr. Nagesh Kumar and Prof. Ram offset by the impetus provided by the rationalisation Singh, were of the view that the stance be changed of GST rates. from neutral to accommodative. To summarize, there has been a significant The minutes of the MPC’s meeting will be moderation in inflation. Moreover, the prevailing published on October 15, 2025. global uncertainties and tariff related developments are likely to decelerate growth in H2:2025-26 and The next meeting of the MPC is scheduled during beyond. The current macroeconomic conditions and December 3 to 5, 2025. RBI Bulletin October 2025 9MONETARY POLICY STATEMENT (SEPTEMBER 29-OCTOBER 1) 2025-26 Statement on Developmental and Regulatory PoliciesStatement on Developmental and Regulatory Policies MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 Statement on Developmental approach for calculating the capital charge for credit risk. The draft guidelines shall be issued shortly. and Regulatory Policies 3. Forms of Business and Prudential Regulation for Investments This Statement sets out various developmental and regulatory policy measures relating to The draft guidelines on forms of business and (i) Regulations; (ii) Foreign Exchange Management; investment for banks which was issued in October (iii) Consumer Protection and (iv) Financial Markets. 20241 has been finalised and shall be issued shortly. Based on feedback and review, the proposed bar on I. Regulations overlap in the businesses undertaken by a bank and its 1. Expected Credit Loss (ECL) framework for group entity is being removed. The circular envisages provisioning to streamline the activities being undertaken by banks and their group entities while providing more With a view to strengthen the resilience of operational freedom to the banks and NOFHCs for the banking sector, it is proposed to issue the draft equity investments and setting up group entities Reserve Bank (Asset Classification, Provisioning and respectively. Income Recognition) Directions, 2025 for Scheduled Commercial Banks (excluding Small Finance Banks, 4. Introduction of Risk Based Premium Framework Payments Banks and Regional Rural Banks) and All for Deposit Insurance in India India Financial Institutions. The draft directions inter Deposit Insurance and Credit Guarantee alia, propose to replace the extant framework based Corporation (DICGC), under the DICGC Act, 1961 has on incurred loss with an Expected Credit Loss (ECL) been operating the deposit insurance scheme since approach, subject to a prudential floor, while retaining 1962 on a flat rate premium basis. At present, the the existing asset classification norms. The guidelines banks are charged a premium of 12 paise per ₹100 are expected to enhance credit risk management of assessable deposits. While the existing system is practices, promote better comparability of reported simple to understand and administer, it does not financials across institutions. The framework is differentiate between banks based on their soundness. designed to be implemented in a non-disruptive It is, therefore, proposed to introduce a Risk Based manner with a suitable glide-path. Premium model which will help banks that are more sound to save significantly on the premium paid. 2. Basel III Guidelines on Capital Charge for Credit Detailed notification will be issued shortly, which will Risk – Standardised Approach be effective from the next financial year. As a part of the broader objective of improving 5. Review of Capital Market Exposures Guidelines the resilience of the banking sector and aligning the for banks regulatory framework with the best international Capital market exposures (CME) of the regulated practices, it is proposed to issue the draft guidelines entities (REs) which include, inter alia, lending on implementation of the revised Basel framework on against securities to individuals and lending to Standardised Approach for Credit Risk for Scheduled capital market intermediaries, have been subject to Commercial Banks (excluding Small Finance Banks, prudential regulations relating to sectoral exposure Payments Banks, and Regional Rural Banks).The limits, single borrower limits, margin requirements, revised framework aims to improve the robustness, granularity and risk sensitivity of the standardized 1 https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=58823 RBI Bulletin October 2025 11MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 Statement on Developmental and Regulatory Policies etc. Further, bank finance for acquisition of shares has 7. Risk Weights on infrastructure lending by NBFCs been generally disallowed. Infrastructure projects that have commenced There has been significant growth and operations typically exhibit lower risk compared development in the capital market structure, along to those under construction. Recognizing this risk with strengthening of the banking system in recent differential, the existing capital adequacy norms permit years. With the objective of rationalising the extant NBFCs to assign a lower risk weight to operational guidelines and broadening the scope for capital projects under Public-Private Partnerships (PPPs). market lending by banks and other regulated entities, With a view to further rationalise the risk weights it is proposed to inter alia: for infrastructure lending by NBFCs in line with the • provide an enabling framework for banks to nuanced risk-profile of operational projects, it has been finance acquisitions by Indian corporates; decided to introduce a principle-based framework. The framework aims to align risk weights with the • enhance the limit for lending by banks against actual risk characteristics of operational infrastructure shares, units of REITs, units of InvITs while projects, promoting better risk assessment and capital removing the regulatory ceiling altogether on allocation. Draft regulations in this regard shall be lending against listed debt securities; and issued shortly for public consultation. • put in place a more principle-based framework for lending to capital market intermediaries. 8. Discussion Paper on Licensing Framework for new Urban Co-operative Banks (UCBs) The draft guidelines shall be issued shortly. Since 2004, issuance of fresh license for UCBs had 6. Guidelines on Enhancing Credit Supply for Large been paused following weak financial health of the Borrowers through Market Mechanism – Withdrawal UCB Sector. Considering that more than two decades The Guidelines on Enhancing Credit Supply for have passed since then and the positive developments Large Borrowers through Market Mechanism2 were in the sector, a discussion paper on licensing of new introduced in August 2016 with an objective to Urban Co-operative Banks (UCBs) will be issued address the concentration risk arising from the shortly. aggregate credit exposure of the banking system to a single large corporate and encourage such large 9. Consolidation of Regulatory Instructions corporates to diversify their sources of funding. Upon The evolution of regulatory framework review, considering, inter-alia, the changes evident in administered by the Reserve Bank has resulted in the profile of bank funding to corporate sector since proliferation of several circulars and directions. In order the introduction of the Guidelines, it is proposed to to provide ease of access and reduce the compliance withdraw the guidelines. While the Large Exposures cost faced by the regulated entities, the Reserve Framework since put in place for banks addresses Bank has undertaken an exercise of consolidating concentration risk at an individual bank-level, the regulatory instructions administered by the concentration risk at the banking system level, as and Department of Regulation of the Reserve Bank into a when considered as a risk, will be managed through set of Master Directions on an ‘as is’ basis The drafts specific macroprudential tools. The draft circular to of about 250 Master Directions consolidating extant withdraw these guidelines shall be issued shortly for instructions on up to 30 areas for 11 types of regulated public comments. entities shall be placed on the website shortly for 2 https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10574&Mode=0 comments on their completeness and accuracy. 12 RBI Bulletin October 2025Statement on Developmental and Regulatory Policies MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 10. Review of Restrictions on Transaction Accounts the period for the forex outlay from four months to six months, in case of MTT. This relaxation is With the objective of enforcing credit discipline expected to help Indian merchants overcome among borrowers as well as to facilitate better the challenges they face in completing their monitoring by lenders, certain restrictions were business transactions efficiently while maintaining placed on the operation of Current Accounts (CA), profitability. The amendments to regulations will be Cash Credit Accounts (CC) and Overdraft Accounts notified shortly. (OD) (“Transaction Accounts”) offered by banks vide various circulars issued from time to time. Based on 13. Relaxation in compliance requirements for Small the experience gained and feedback received, these Value Exporters/Importers instructions have been reviewed and it is proposed With a view to ease compliance for exporters/ to ease some of the stipulations and provide greater importers, especially of small value goods and flexibility to the banks in this regard, particularly services, it has been decided to simplify the process in case of borrowers being entities regulated by a of reconciliation in Export Data Processing and financial sector regulator. The draft guidelines shall Monitoring System (EDPMS) and Import Data be issued shortly. Processing and Monitoring System (IDPMS). II. Foreign Exchange Management As per the revised guidelines, bills can be reconciled 11. Foreign Currency accounts by Indian exporters- and closed by an AD bank in EDPMS or IDPMS, extension of time period for repatriation from based on a declaration by the concerned exporter or accounts held in IFSC in India importer, as the case may be, that the amount has In January 2025, RBI had permitted Indian been realised, for a shipping bill, or paid against a Bill exporters to open foreign currency accounts with a of Entry, for entries (including outstanding entries) in bank outside India for realisation of export proceeds. EDPMS/IDPMS of value equivalent to INR 10 lakh per Funds in these accounts can be used for making bill, or less. import payment or have to be repatriated by the end The revised procedure will also enable reduction of next month from the date of receipt of the funds. in the realisable value of bills by AD banks based on It has now been decided to extend the time period such declaration. This measure is expected to reduce for repatriation, from one month to three months, in compliance burden on small value exporters and case of such foreign currency accounts maintained in importers and enhance ease of doing business. The IFSC in India. This will encourage Indian exporters directions will be issued shortly. to open accounts with IFSC Banking Units and also increase forex liquidity in IFSC. The amendments to 14. Review of External Commercial Borrowing regulations will be notified shortly. Framework 12. Merchanting Trade Transactions (MTT) With an objective to rationalise and simplify the regulations governing External Commercial Global uncertainties in trade are resulting in Borrowings (ECB), the Reserve Bank of India has supply chain disruptions, making it challenging undertaken a review of the existing provisions under for Indian merchants to meet their contractual the Foreign Exchange Management (Borrowing and obligations in time. In terms of extant guidelines Lending) Regulations, 2018.3 on MTT, outlay of foreign exchange is allowed upto four months. It has now been decided to increase 3 https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11441&Mode=0 RBI Bulletin October 2025 13MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 Statement on Developmental and Regulatory Policies Based on the review, a revised framework that 17. Measures for strengthening the Internal provides for expansion of eligible borrower and Ombudsman mechanism in REs recognized lender base, rationalization of borrowing The Reserve Bank has institutionalized the limits, rationalization of restrictions on average Internal Ombudsman (IO) mechanism in select maturity period, removal of restrictions on the cost of Regulated Entities (REs) which enables an independent borrowing for ECBs, review of end-use restrictions and apex level review of complaints that are being rejected simplification of reporting requirements, is proposed by the RE. To further improve upon the efficacy of this to be introduced. The draft Framework will be issued mechanism, it is proposed that the IOs be equipped shortly. with compensation powers and be allowed access to the complainant, aligning the role of IOs more closely 15. Rationalisation of regulations for Establishment with that of the RBI Ombudsman. Additionally, a two- in India of a Branch Office or a Liaison Office or a tiered structure may be introduced within REs for Project Office or any other place of business grievance redress prior to escalation to the IO. These The extant regulations for “Establishment in measures aim to provide meaningful and timely India of a Branch Office or a Liaison Office or a Project resolution of customer grievances within the REs, Office or any other place of business”4 were issued by thereby improving service standards and consumer the Reserve Bank in 2016. The regulations have been confidence. A draft of the Master Direction, outlining comprehensively reviewed. The revised regulations these revisions, is being released shortly for public are principle driven and enable delegation of more feedback. powers to AD banks and reduction of compliance 18. Review of the Reserve Bank – Integrated burden, thereby further enhancing the ease of doing Ombudsman Scheme, 2021 business in India. The draft regulations will be issued shortly. The Reserve Bank – Integrated Ombudsman Scheme (RB-IOS) (the Scheme), 2021 launched III. Consumer Protection on November 12, 2021,5 provides customers of 16. Review of instructions on Basic Savings Bank Regulated Entities (REs) a speedy, cost-effective and Deposit (BSBD) Account expeditious alternate grievance redress mechanism. The REs currently covered under the Scheme include BSBD Account is a savings bank account which was Commercial Banks, Regional Rural Banks, Scheduled introduced with the objective of promoting financial Primary (Urban) Co-operative Banks, Non-Scheduled inclusion. The extant instructions on BSBD account Primary (Urban) Co-operative Banks with deposits size require banks to provide certain minimum facilities of ₹50 crore and above, select Non-Banking Financial free of charge, without the requirement of minimum Companies and Credit Information Companies. balance, to the holders of such accounts. The ongoing digitalization in the banking sector necessitates a To enable the customers of the rural co-operative BSBD account that is in sync with the customer’s banks to access the mechanism of RBI Ombudsman, changing requirements. Therefore, it has been decided it has been decided to bring State Co-operative Banks to review the extant instructions on BSBD account to and District Central Cooperative Banks, hitherto with provide affordable banking facilities to the public and NABARD, within the scope of the RBI Ombudsman drive enhanced usage of BSBD accounts to deepen Scheme. Notification will be issued shortly in this financial inclusion. regard. 4 https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10327&Mode=0 5 https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=52549 14 RBI Bulletin October 2025Statement on Developmental and Regulatory Policies MONETARY POLICY STATEMENT (September 29-October 1) 2025-26 Moreover, based on the operational experience, economy with the rest of the world in terms of trade stakeholder feedback, and global best practices, the and capital flows. At present, Financial Benchmarks Reserve Bank has undertaken a comprehensive review India Limited (FBIL) publishes reference rates for of the Scheme. The review seeks to enhance clarity, USD, EUR, GBP and JPY against INR. These rates are simplify procedures and reduce timelines to further widely used for settlement of forex transactions improve timely, fair, and effective redress. The draft including derivatives. It is now proposed to include Scheme shall be placed on the Reserve Bank’s website select currencies of India’s major trading partners in shortly for seeking feedback from stakeholders. the list of reference rates published by FBIL. This is expected to further deepen the onshore forex market IV. Financial Markets and encourage banks to quote directly in a larger 19. Lending in Indian Rupees (INR) by Authorised set of currency pairs, thus eliminating the need for Dealer (AD) banks to Persons Resident Outside India multiple currency conversions and making trade more In order to promote the settlement of cross border efficient. FBIL has been advised to publish the new transactions in INR and local currencies, the Reserve reference rates in consultation with the market. Bank of India has been progressively liberalising 21. Expanding the bouquet of investments for regulations under the Foreign Exchange Management Special Rupee Vostro Accounts (SRVA) holders Act. To take this initiative further, it is essential that To promote exports from India and to support INR liquidity is made available and accessible to increasing interest of global trading community in residents of other countries. As a calibrated step in INR, RBI had permitted Special Rupee Vostro Accounts this direction, it has been decided that AD banks in (SRVA) in July 2022 to facilitate invoicing, payment, India and their overseas branches may be permitted and settlement of exports / imports in INR. The to lend in INR to persons resident in Bhutan, Nepal, arrangement permitted, inter alia, Rupee surplus and Sri Lanka, including a bank in these jurisdictions, balances in SRVA to be invested in government to facilitate cross border trade transactions. The securities including treasury bills. To expand amendments to regulations will be notified shortly. investment opportunities in India for SRVA holders, 20. Additional Reference Rates to be published by it has now been decided to permit balances of these Financial Benchmarks India Limited accounts to be invested in corporate bonds and Over the years, the development of forex market commercial papers. The revised regulations will be has facilitated the growing integration of the Indian notified shortly. RBI Bulletin October 2025 15MONETARY POLICY STATEMENT (SEPTEMBER 29-OCTOBER 1) 2025-26 Monetary Policy Report - September 29-October 1 2025-26Monetary Policy Report OCTOBER 2025 I. Macroeconomic Outlook April 2025, reflecting investor concerns over fiscal risks. At the same time, gold prices continued their upward trajectory as demand strengthened for safe- Amidst heightened trade uncertainties, India’s haven assets, underscoring persistent uncertainty. economic outlook remains resilient, aided by improved The United States (US) Dollar Index fell about 11 per consumption, investment demand and strong cent from January 2025 till end of June, witnessing its macroeconomic fundamentals. GST 2.0 reforms are steepest fall in over a decade. With modest rebound in expected to further boost domestic demand. Inflation the subsequent months, the index stabilised, though is expected to gradually pick up from Q4:2025-26 on concerns over fiscal risks and expectation of rate cuts unfavourable base effect, despite the moderating impact continued to exert pressure. In September 2025, US of GST rationalisation. Against the backdrop of financial markets displayed risk on sentiment with volatile global financial markets, elevated tariff-related equity markets rallying amidst US Federal Reserve risks, and continued geopolitical strife, monetary policy (Fed) rate cut and strong performance by technology remains focussed on maintaining price stability and companies. Bond yields softened and the dollar sustained economic growth. weakened in the first half of September following the I.1 Key Developments since the April 2025 MPR Fed’s rate cut; however, these trends reversed after the release of stronger-than-expected economic data. Since the release of the Monetary Policy Report (MPR) in April 2025, global economic growth has Global commodity prices generally softened remained steady, but still below its historical average.1 due to weakening demand and improved supply Trade tensions, aggravated by tariff measures, along conditions, although volatility persisted across with geopolitical tensions continued to weigh on the segments. Industrial metal prices fell sharply in April global outlook. Headline inflation has moderated in 2025 on account of demand concerns but firmed several economies. However, it still remains above up in subsequent months. Agricultural prices eased target in most jurisdictions, even as core inflation overall, mainly led by cereals, even as vegetable oils pressures eased. As a result, monetary policy pathways increased on account of tighter supplies and stronger continue to diverge across countries. Several central demand. Brent crude prices remained volatile, with banks moved cautiously into an easing cycle, although a downward bias during this period, in response to lingering inflation pressures necessitated a guarded shifting demand conditions and supply outlook. approach. In contrast, some central banks have Turning to the domestic economy, India’s credit adopted a more accommodative stance to counter rating was recently upgraded to BBB+ (Stable) by their slowing growth and rising unemployment. Rating and Investment Information, Inc. (R&I), Japan, and to BBB (Stable) by Standard and Poor's (S&P) Global Financial market volatility persisted, with global Ratings, reflecting confidence in the country’s strong equities retreating in April 2025 amidst tariff-related domestic demand, fiscal discipline, and external uncertainties. Since then, markets have rebounded stability. Real gross domestic product (GDP) expanded and reached new highs. Sovereign bond yields in by 7.8 per cent in Q1:2025-26, the fastest pace in major advanced economies (AEs) have hardened since seven quarters. Growth was driven by strong private 1 The estimates and projections in the October 2025 MPR are based on and government consumption and buoyant gross statistical information available till September 26, 2025, which may not reflect the latest available data in all cases. fixed capital formation. On the supply side, real gross RBI Bulletin October 2025 17OCTOBER 2025 Monetary Policy Report value added (GVA) rose by 7.6 per cent, driven by a 9 2025, inviting public comments on four key aspects per cent expansion in services, and robust growth in – the choice between headline and core inflation, the manufacturing. Agriculture and allied activities also appropriateness of the 4 per cent inflation target, improved with a 3.7 per cent increase. potential revisions to the tolerance band of +/- 2 per cent, and whether to maintain a specific target level Headline Consumer Price Index (CPI) inflation or only a range for inflation. eased to 3.2 per cent in April 2025, from 4.7 per cent in H2:2024-25, aided by favourable base effects and Monetary Policy Committee Meetings: April falling food prices. It moderated further to 1.6 per 2025 – September 2025 cent in July 2025, the lowest reading in eight years, The MPC met in April 2025 amidst heightened as food inflation turned negative in June and July global uncertainties from trade tariff measures which 2025. Even in August, inflation remained benign at impeded global growth and inflation prospects. The 2.1 per cent driven down by deflation in vegetables dollar index declined sharply and equity sell-offs and pulses. Core inflation (i.e., CPI excluding food became broad-based especially in emerging markets. and fuel), however, largely remained steady around On the domestic front, sustained rural demand, 4 per cent. higher government capital expenditure, and healthy The Monetary Policy Committee (MPC) continued balance sheet of corporates and banks supported its easing cycle, initiated in February 2025, with a growth and the investment outlook, although the 25 basis points (bps) cut in April 2025, followed by headwinds from global trade disruptions posed a frontloaded cut of 50 bps in June 2025, bringing downside risks. Consequently, the real GDP growth the repo rate down to 5.5 per cent. The stance of projection for 2025-26 was revised downwards by 20 policy was shifted to accommodative in April from bps to 6.5 per cent. Headline CPI inflation declined neutral in February but reverted to neutral in June by 160 bps during January-February 2025, reaching indicating the limited policy space for further easing. a 21-month low of 3.8 per cent in February 2025 on In addition, the RBI announced a phased 100 bps account of falling food prices. The outlook for food reduction in the cash reserve ratio (CRR) in four inflation improved with a broad-based seasonal tranches starting September 2025 to ease liquidity correction in vegetable prices. It was expected conditions. At its August meeting, the MPC kept the to soften further, aided by robust kharif arrivals repo rate unchanged at 5.5 per cent while retaining and record wheat production, despite risks from the neutral stance, reaffirming its commitment to global market uncertainties and adverse weather. aligning inflation with the target while supporting Consequently, the CPI inflation projection for 2025- growth. 26 was revised downwards to 4 per cent. The MPC noted that there was greater confidence in the On the brink of the next review of the monetary durable alignment of headline inflation with the policy framework due in March 20262, the Reserve target, but growth still remained on a recovery path. Bank has issued a discussion paper on August 21, Accordingly, the MPC unanimously voted to reduce 2 In May 2016, the Reserve Bank of India Act, 1934 was amended to provide the policy repo rate by 25 bps to 6.0 per cent and a statutory basis for the inflation targeting framework in India. As per change the stance from neutral to accommodative to Section 45ZA of the Act, the Central Government, in consultation with the Reserve Bank, is required to set the CPI-based inflation target once in every continue supporting growth. five years. For the first cycle (2016–2021) and the ongoing second cycle (2021-2026), the RBI was tasked with maintaining inflation at 4 per cent, At the time of the June 2025 meeting, uncertainty with a tolerance band of +/- 2 per cent. The next review is due by March 2026. around the global economic outlook had somewhat 18 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 eased, though global sentiments remained weak. prolonged geopolitical tensions, persisting global Domestic economic activity was, however, expected uncertainties and volatility in global financial markets to maintain momentum in 2025-26, supported posed risks. Nonetheless, real GDP projection for by private consumption, traction in fixed capital 2025-26 was retained at 6.5 per cent. The MPC noted formation, and the conclusion of the Free Trade that while growth has held up well, the decline in Agreement (FTA) with the United Kingdom. Given inflation was largely driven by food prices, especially the expected domestic resilience amid challenging vegetables. Inflation was expected to firm up from external environment, the projection of real GDP Q4:2025-26. It also underscored that uncertainties on growth for 2025-26 was retained at 6.5 per cent. tariffs were still evolving, and the impact of past policy Headline CPI inflation continued to decline in rate cuts were still progressing through the economy. Accordingly, the MPC unanimously voted to keep the March and April, led by falling food prices while core repo rate unchanged at 5.5 per cent and to maintain inflation remained largely stable. With the outlook the neutral stance. for food inflation also staying favourable, CPI inflation projection for 2025-26 was again revised The MPC’s voting pattern reflects the diversity downwards by 30 bps to 3.7 per cent. The MPC noted in individual members’ assessments, expectations that the near- and medium-term outlook for inflation and policy preferences – a characteristic also reflected gave confidence that headline inflation would in voting patterns of other central banks (Table I.1). remain durably aligned with the target, and might With the pace of disinflation slowing down or even even undershoot it marginally. However, growth reversing in some AEs, central banks are moving remained lower than aspirations. Accordingly, the cautiously in this easing cycle. Among AEs, the US MPC voted, by a 5-1 majority, to reduce the policy cut its policy rate for the first time this calendar year repo rate by 50 bps to 5.5 per cent, frontloading while Japan kept its policy rates unchanged over its the rate cut to stimulate private consumption and last four meetings. investment through policy levers to step up the growth momentum. One member voted for a smaller Table I.1 Monetary Policy Committees Meetings 25 bps cut in the policy repo rate. The stance was also and Policy Rate Voting Patterns changed from accommodative to neutral, recognising Country Policy Meetings: April 2025 - September 2025 Total Meetings Meetings Variation that after a cumulative policy rate cut of 100 bps in meetings with full without in policy quick succession, monetary policy had limited space consensus full rate (basis consensus points) to support growth further. Brazil 4 4 0 75 In the run up to the August 2025 meeting, headline Chile 4 4 0 -25 Colombia 3 1 2 -25 CPI inflation declined for the eighth consecutive Czech Republic 4 3 1 -25 month to 2.1 per cent in June 2025, primarily driven Hungary* 6 5 0 0 India 3 2 1 -75 by a fall in food prices to new lows. Assuming a normal Japan 4 3 1 0 monsoon, CPI inflation projection for 2025-26 was South Africa 3 1 2 -50 revised downwards to 3.1 per cent. Domestic growth Sweden 4 3 1 -50 Thailand 3 1 2 -50 remained resilient, with private consumption aided UK 4 0 4 -50 by rural demand and fixed investment supported by US 4 2 2 -25 buoyant government capex. Lower inflation, rising Notes: 1. Minus sign indicates a reduction in policy rate. 2. *: Total number of meetings happened is six. However, the capacity utilisation, and congenial financial conditions minutes of last meeting (September 23, 2025) is not published to date. continued to support growth outlook. However, Sources: Central bank websites. RBI Bulletin October 2025 19OCTOBER 2025 Monetary Policy Report Factors conditioning the Macroeconomic Outlook Table I.2: Baseline Assumptions for Projections Macroeconomic developments pertaining to Indicator MPR April 2025 MPR October 2025 inflation and economic activity during H1:2025-26 Crude Oil US$ 70 per barrel US$ 70 per barrel (April-September 2025) are analysed in Chapters II (Indian Basket) during 2025-26 during H2: 2025-26 and III. Going forward, the outlook is premised on Exchange rate ₹ 86/US$ during ₹ 88/US$ during H2: a set of baseline assumptions. First, the baseline 2025-26 2025-26 assumption for crude oil prices (Indian basket) is Monsoon Normal for 2025-26 Normal for 2026-27 retained at US$ 70 per barrel for the second half of Global growth 3.1 per cent in 2025 3.0 per cent in 2025 3.0 per cent in 2026 3.1 per cent in 2026 2025-26 (Table I.2). International crude oil prices fell Fiscal deficit To remain within BE To remain within BE sharply in April due to demand concerns stemming (Per cent of GDP) 2025-26 2025-26 from growth-disruptive tariff announcements, and Centre: 4.4 Centre: 4.4 continued its downward trajectory in May as supply Combined: 7.1 Combined: 7.4 outpaced demand, particularly from Organization Domestic macroeconomic/ No major change GST rationalisation structural policies during of the Petroleum Exporting Countries plus (OPEC+) the forecast period economies. In June, however, prices surged Notes: 1. The Indian basket of crude oil represents a derived numeraire intermittently as escalating tensions between Russia comprising sour grade (Oman and Dubai average) and sweet and Ukraine, and intensifying conflict between Israel grade (Brent) crude oil. 2. The exchange rate path assumed here is for the purpose of and Iran, heightened the risk premia amidst fears generating the baseline projections and does not indicate any of supply chain disruptions. Since July, crude prices ‘view’ on the level of the exchange rate. The Reserve Bank is have resumed downward trend, supported by easing guided by the objective of containing excess volatility in the foreign exchange market and not by any specific level of and/or geopolitical tensions and improving fundamentals band around the exchange rate. (Chart I.1a). The consistent rise in crude oil inventory 3. BE: Budget estimates. levels since Q3:2024, and their sustained elevation 4. Combined fiscal deficit refers to that of the Centre and States taken together. through 2025, reflects underlying positive supply- Sources: RBI estimates; Budget documents; and the International side developments including increased output from Monetary Fund (IMF). Chart I.1: Crude Oil Prices and Exchange Rate Dynamics a. Brent Prices b. World Oil Production, c. India's Exchange Rate (US$ per barrel) Consumption and Inventory (INR/USD) 95 (Million barrels per day) 90 107 2.4 2 85 104 1.6 80 1.2 75 101 0.8 70 0.4 65 98 0 60 -0.4 95 -0.8 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2023 2024 2025 Spot price Futures - September 26, 2025 Production Consumption Futures - March 31, 2025 Inventory (RHS) 20 RBI Bulletin October 2025 32-naJ 32-luJ 42-naJ 42-luJ 52-naJ 52-luJ 62-naJ 62-luJ 84 85 86 87 88 89 5202-10-10 5202-10-82 5202-20-42 5202-30-32 5202-40-91 5202-50-61 5202-60-21 5202-70-90 5202-80-50 5202-90-10 5202-90-62 Notes: 1. In Chart I.1b, shaded area represents projections. 2. In Chart I.1c, exchange rate series has been plotted in an inverted scale. Sources: Bloomberg; US Energy Information Administration (EIA); and Petroleum Planning & Analysis Cell.Monetary Policy Report OCTOBER 2025 OPEC+ countries3 (Chart I.1b). Considering the at 3.0 per cent in 2025 and 3.1 per cent in 2026. These downward shift in the oil futures curve since the projections are below the estimated outcome of 3.3 April 2025 MPR, along with projections of higher per cent in 2024 and the pre-pandemic historical production and continued inventory build-up, the average of 3.7 per cent (Chart I.2). The slowdown is supply-demand outlook for crude oil remains broadly broad-based, affecting both AEs and emerging market favourable. Upside risks, however, persist due to and developing economies (EMDEs). Growth in AEs heightened geopolitical uncertainty. is expected to decline to 1.5 per cent in 2025 from 1.8 per cent in 2024, while EMDEs are projected to Second, in view of ongoing uncertainty grow at 4.1 per cent in 2025, marginally lower than 4.3 surrounding the US dollar and the volatility in per cent in 2024. In its Economic Outlook (September global capital flows, the baseline assumption for the 2025), the Organisation for Economic Cooperation and exchange rate has been increased to ₹88 per US dollar Development (OECD) also anticipates a slowdown, for the second half of 2025-26, from ₹86 per US dollar in the April 2025 MPR. The Indian rupee appreciated despite a marginal upwards revision for 2025. Global by over 1 per cent (month-on-month [m-o-m]) in April GDP growth is projected to decelerate from 3.3 per 2025, in line with other emerging market currencies, cent in 2024, to 3.2 per cent in 2025 and 2.9 per cent mirroring the weakness of the US dollar amidst rising in 2026, as front-loading ceases and higher tariff rates economic uncertainty in the US (Chart I.1c). Since May and still-high policy uncertainty dampen investment and up to the first half of July, the rupee remained and trade. World trade volume (goods and services), largely stable, trading around ₹85 per US dollar, despite as projected by the IMF, is also expected to lose elevated trade tensions and geopolitical risks. From momentum, with growth slowing from 3.5 per cent mid-July onwards, the rupee exhibited depreciating in 2024 to 2.6 per cent in 2025 and further to 1.9 per bias, moving within a range of ₹85.8-₹88.76. This cent in 2026. This is because the near-term boost from movement was driven by portfolio outflows, increase front-loading of trade flows is expected to wane in the in US tariff rates on Indian exports, and narrowing rest of 2025. Global inflation is projected to ease, with interest rate differentials. Nevertheless, India's strong macroeconomic fundamentals and growth Chart I.2: IMF and OECD projections for Growth and Inflation prospects continue to provide underlying support to (Per cent) the currency. Overall, in H1:2025-26, the Indian rupee 6.2 6.0 5.6 exhibited two-way movement, hovering close to ₹86.4 5.0 per US dollar, on average, with volatility lower than 4.2 that of most other emerging market economy (EME) 4.0 3.3 3.03.1 3.33.2 2.9 3.6 3.4 2.9 currencies.4 3.0 Third, according to the International Monetary 2.0 Fund (IMF), the global economy is projected to grow 1.0 0.0 3 On August 3, OPEC+ members again agreed to accelerate their scheduled IMF OECD IMF OECD production increases. The 2.2 million barrels per day (b/d) of production -1.0 GDP Inflation cuts announced in November 2023 and initially scheduled to be fully unwound by September 2026 will now be fully unwound by September 2024 2025 2026 2025. Also, on September 7, OPEC+ announced that it plans to raise production by 137 thousand b/d in October 2025. Note: OECD inflation projections are for G-20 countries. 4 Indian rupee was less volatile, calculated via standard deviation, than Sources: World Economic Outlook July 2025 Update, IMF; and Economic Outlook September 2025, OECD. MSCI EME currency index during H1:2025-26. RBI Bulletin October 2025 21OCTOBER 2025 Monetary Policy Report headline inflation expected at 4.2 per cent in 2025 and urban households moderated by 20 bps to 8.1 per cent 3.6 per cent in 2026, supported by softening energy and 30 bps to 8.7 per cent, respectively. The shares of prices and subdued demand conditions. Inflation respondents anticipating a rise in inflation declined dynamics are, however, expected to diverge across for the near term and year ahead compared to the economies. In the US, tariffs are likely to function previous round (Chart I.3a). Urban households’ long- as a supply-side shock, gradually passing through term expectations on inflation have been sequentially to consumer prices and pushing inflation higher in declining for the past four survey rounds. Additionally, the latter half of 2025. In contrast, higher tariffs are as per the Reserve Bank’s recent bi-monthly Rural expected to dampen export demand and thereby exert Consumer Confidence Survey (RCCS)6, the current downward pressure on inflation in other regions. perception of inflation (vis-à-vis a year ago) of the I.2 The Outlook for Inflation rural and semi-urban households inched up by 10 bps to 5.9 per cent in September 2025 as compared In H1:2025-26 (up to August), headline inflation with the previous round. However, their year has remained well below 4 per cent driven by benign ahead inflation expectations declined by 30 bps to food prices and favourable base effects. However, it 7.6 per cent (Chart I.3b). Rural households’ long increased to 2.1 per cent in the month of August as term expectations of inflation has been sequentially compared to 1.6 per cent in July 2025 which is a first declining for the past five rounds of survey. increase recorded after nine consecutive months of decline. In the September 2025 round of the Reserve Manufacturing firms polled in the July- Bank’s bi-monthly households survey5, the three September 2025 round of the Reserve Bank’s quarterly months and one year ahead inflation expectations of industrial outlook survey expect pressures from Chart I.3: Inflation Expectations of Households a. Urban Households b. Rural Households [In(cid:28)lation rate (Per cent), left scale; (Per cent) Proportion of respondents (Per cent), right scale] 13 80 12 70 11 10 60 9 50 8 7 40 6 30 5 4 20 Sources: Inflation Expectations Survey of Households; and Rural Consumer Confidence Survey of Households, RBI. 5 The Reserve Bank’s inflation expectations survey of households is being conducted in 19 cities since March 2021 (18 cities in the previous rounds) and the results of the September 2025 round are based on responses from 6,082 households. 6 The Reserve Bank’s rural consumer confidence survey is being conducted across all Indian states and three major UTs since July 2024 and the results of the September 2025 round are based on responses from 8,848 respondents. 22 RBI Bulletin October 2025 22-yaM 22-luJ 22-peS 22-voN 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 52-luJ 52-peS 11 10 9 8 7.6 7 5.9 6 5 4 Three months ahead (Median) One year ahead (Median) Three months ahead price increase more than the current rate (RHS) One year ahead price increase more than the current rate (RHS) 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 52-luJ 52-peS Current Perception (Median) One year ahead Expectation (Median)Monetary Policy Report OCTOBER 2025 cost of raw materials to ease in Q3:2025-26. The and intoxicants, and fuel and light) is expected to be growth in selling prices is expected to be higher at 4.2 per cent during Q2:2025-26, thereafter, remain vis-à-vis the previous quarter (Chart 1.4a).7 Services around 4.0 per cent till Q4 and further soften to 3.8- firms expect stable input cost pressures but higher 3.9 per cent in H1:2026-27. growth in selling prices in Q3, while firms from Long-run inflation expectations of professional infrastructure sector anticipate easing of cost forecasters – measured by their five and ten years pressures and expect lower growth in selling prices. ahead expectations – have eased to 4.0 per cent in (Chart 1.4b and 1.4c).8 In the Purchasing Managers’ the current round (Chart 1.5b). Index (PMI) surveys for August 2025, services firms reported a substantial increase in input and output Looking ahead, the inflation outlook will depend prices vis-à-vis the previous month due to higher upon several factors, both global and domestic. labour costs and robust demand conditions, while Assuming a normal monsoon and a sustained manufacturing firms reported only a marginal reduction in food inflation, the quarterly CPI increase in both prices. inflation forecasts for 2025-26 have been adjusted downward in RBI staff projections. Nevertheless, Professional forecasters surveyed by the Reserve Bank in September 2025 forecasted CPI inflation to inflation is expected to rise from the final quarter of decrease from 2.7 per cent in Q1:2025-26 to 1.9-2.0 per this financial year, yet the recent GST rationalization cent in Q2 and Q3. It is expected to increase gradually among other favourable factors will help keep overall to 3.6 per cent in Q4 and further to 4.2 per cent in inflation low during 2025-26. While the uncertainties H1:2026-27 (Chart I.5a and Table I.3).9 Core inflation surrounding tariffs continue to remain, the impact of (i.e., CPI excluding food and beverages, pan, tobacco previous policy rate reductions are still unfolding. Chart I.4: Expectations about Cost of Raw Materials/Inputs and Selling Prices a. Manufacturing Firms b. Services Firms c. Infrastructure Firms [Net response (Per cent)] [Net response (Per cent)] [Net response (Per cent)] 80 60 40 24.1 20 0 -20 -40 -45.6 -60 -80 -100 Note: Net response is the difference between the share of respondents reporting optimism and those reporting pessimism. The range is -100 to 100. A positive/ negative value of net response is considered as optimistic/pessimistic from the viewpoint of respondent firms. Therefore, higher positive values of selling prices indicate increase in output prices while lower values for the cost of raw materials/cost of inputs indicate higher input price pressures and vice versa. Sources: Industrial Outlook Survey and Services and Infrastructure Outlook Survey, RBI. 7 The results of the July-September 2025 round of the industrial outlook survey are based on responses from 1,106 companies. 8 Based on 614 services companies and 92 infrastructure firms polled in the July-September 2025 round of the services and infrastructure outlook survey. 9 Forty-eight panellists participated in the September 2025 round of the Reserve Bank’s Survey of Professional Forecasters. RBI Bulletin October 2025 23 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 80 60 45.8 40 20 0 -20 -40 -60 -53.5 -80 -100 2022-23 2023-24 2024-25 2025-26 Cost of raw materials Selling price 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 80 60 40 43.6 20 0 -20 -40 -57.8 -60 -80 -100 2022-23 2023-24 2024-25 2025-26 Cost of inputs Selling price 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2022-23 2023-24 2024-25 2025-26 Cost of inputs Selling priceOCTOBER 2025 Monetary Policy Report Chart I.5: Inflation Expectations of Professional Forecasters a. Short-run* b. Long-run (Per cent) (Per cent) 8 6 7 6 5 5 4.2 4.2 4 3.6 4 3 1.9 2.0 2 1 3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2023-24 2024-25 2025-26 2026-27 Actual Median projection Survey Round *: Four quarters ahead expectations in September 2025. Five years ahead Ten years ahead Sources: Survey of Professional Forecasters, RBI; and National Statistics Office. Table I.3: Projections - Reserve Bank and Professional Forecasters (Per cent) 2025-26 2026-27 Reserve Bank’s Baseline Projections Inflation 2.6 4.5 Real GDP growth 6.8 6.6 Median Projections of Professional Forecasters Inflation, Q4 (y-o-y) 3.6 - Real GDP growth 6.7 6.5 Gross domestic saving (per cent of GNDI) 30.0 30.4 Gross capital formation (per cent of GDP) 32.8 33.0 Credit growth of scheduled commercial banks 11.0 11.5 Combined gross fiscal deficit (per cent of GDP) 7.4 7.1 Central government gross fiscal deficit (per cent 4.4 4.2 of GDP) Repo rate (end-period) 5.25 - Yield on 91-days treasury bills (end-period) 5.5 6.0 Yield on 10-year central government securities 6.4 6.5 (end-period) Overall balance of payments (US$ billion) 7.6 20.0 Merchandise exports growth 0.2 5.0 Merchandise imports growth 2.5 6.0 Current account balance (per cent of GDP) -0.9 -0.9 Note: GNDI: Gross National Disposable Income. Source: RBI staff estimates; and Survey of Professional Forecasters (September 2025). 24 RBI Bulletin October 2025 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 52-peS Considering the initial conditions, signals time-series and structural models10, CPI inflation is from forward-looking surveys and estimates from projected to average 2.6 per cent in 2025-26 with 1.8 per cent in both Q2 and Q3 and 4.0 per cent in Q4, with risks evenly balanced (Chart I.6 and Table 1.3). The 50 per cent and the 70 per cent confidence intervals for headline inflation in Q4:2025-26 are Chart I.6. Projection of CPI Inflation (y-o-y) (Per cent) 10 8 6 4 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2023-24 2024-25 2025-26 2026-27 50 per cent CI 70 per cent CI 90 per cent CI CI-Confidence Interval Note: The fan chart depicts uncertainty around the baseline projection path. The baseline projections are conditioned upon the assumptions set out in Table I.2. The thick red shaded area represents 50 per cent confidence interval, implying that there is 50 per cent probability that the actual outcome will be within the range given by the thick red shaded area. Likewise, for 70 per cent and 90 per cent confidence intervals, there is 70 per cent and 90 per cent probability, respectively, that the actual outcomes will be in the range represented by the respective shaded areas.(cid:143) Source: RBI staff estimates. 10 Joice John, Deepak Kumar, Asish Thomas George, Pratik Mitra, Muneesh Kapur and Michael Debabrata Patra (2023), “A Recalibrated Quarterly Projection Model (QPM 2.0) for India”, Reserve Bank of India Bulletin, February, Volume LXXVII(2), pp.59-77.Monetary Policy Report OCTOBER 2025 3.0-5.0 per cent and 2.4-5.6 per cent, respectively. I.3 Growth Outlook For 2026-27, assuming a normal monsoon, and no Domestic economic activity remains resilient, further exogenous or policy shocks, structural model supported by strong private consumption, government estimates indicate that inflation will average 4.5 per consumption and fixed investment. An above-normal cent with 4.5 per cent in both Q1 and Q2, 5.1 per cent southwest monsoon, congenial financial conditions, in Q3 and 3.9 per cent in Q4. The 50 per cent and the rising capacity utilisation, the government’s continued 70 per cent confidence intervals for headline inflation thrust on capital expenditure, and GST 2.0 reforms in Q4:2026-27 are 2.4-5.3 per cent and 1.6-6.1 per cent, augured well for the growth outlook. Improving respectively. credit conditions are also likely to spur aggregate The baseline forecasts are subject to several upside demand conditions in the near-term (Box I.1). and downside risks. The upside risks emanate from However, outlook remains uncertain due to external supply disruptions caused by weather-related shocks demand uncertainty driven by tariffs; prolonged and prolonged geopolitical conflicts. The downside geopolitical tensions; and volatility in global financial risks could emanate from an early resolution of markets. geopolitical conflicts and tariff related uncertainties; global growth moderation; softening commodity Turning to the key messages from forward- prices; and improvement in supply conditions. looking surveys, bi-monthly consumer confidence (the Box I.1: The Effect of Credit Conditions on Monetary Policy The interest rate channel is central to the conduct of higher index indicating tighter credit supply. This index monetary policy under inflation targeting: the central is estimated using India’s credit-to-GDP gap series of the bank influences the price of credit (interest rates) through Bank for International Settlements (BIS), controlling for its control over the price of bank reserves. This, ceteris aggregate demand conditions and the effects of monetary paribus, affects the quantity of lending and thereby policy. Credit supply conditions eased substantively in demand conditions in the economy. This is considered the response to counter the economic fallout of the Covid-19 primary channel of macroeconomic stabilization through pandemic, but tightened significantly thereafter to control monetary policy. Yet, this textbook narrative and its the inflationary fallout of the Russia-Ukraine conflict. underlying assumptions simplify the more sophisticated Subsequently, credit supply conditions have eased. In this role played by credit-issuing financial institutions in context, the size of recent deviation of the credit supply modern monetary economies. index from its average value is used here to simulate the macroeconomic impact of shocks to credit supply in the Changes in funding costs are an important determinant Indian economy using the Quarterly Projection Model of portfolio management by credit-issuing financial (QPM 2.0). institutions, with loan creation on the asset side being the key indicator of importance from a monetary policy Chart I.1.1.b shows the baseline path and probability perspective. However, credit supply is also influenced distribution of credit conditions of an expansionary by macroeconomic outlook, financial stability concerns, shock to credit supply (a negative shock indicates looser regulatory requirements, institutional objectives, and credit conditions) as observed in the recent period with broader uncertainties. Thus, the resulting financial an assumption of no further shocks of any kind to the strategies can generate shifts in credit supply, at times economy. In the baseline case, buoyant credit supply autonomous of monetary policy. These shifts nonetheless may spur aggregate demand conditions in the near-term have implications for monetary policy. (Chart I.1.1.c), with quantity effects moderating in the medium-term. However, such a shock may push up core Chart I.1.1.a presents an index of the supply of credit in the Indian economy in the post-Covid19 period, with a (Contd.) RBI Bulletin October 2025 25OCTOBER 2025 Monetary Policy Report Chart I.1.1: Impact of Credit Conditions a. An Index of Credit Supply in the Recent Period Note: The credit supply index here has been derived econometrically by regressing the credit-to-gdp gap on output gap with appropriate leads and lags. The residual series has been smoothened using a state-space model with stochastic volatility framework, and is an index of credit supply. The dotted lines represent one standard deviation dispersion. Higher index indicates tighter credit supply. b. Effect of Changes in Credit Supply on c. Effect of Changes in Credit Conditions on Aggregate Credit Conditions Aggregate Demand Note: higher index indicates tighter credit conditions. The dark line is the baseline case of expansionary shock to credit supply with the dispersion representing variance conditional on shock size. The subsequent path is under the assumption of no further macroeconomic shocks of any kind. d. Effect of Changes in Credit Conditions on e. Effect of Changes in Credit Conditions on Headline Inflation the Projected Policy Rate Path and therefore headline inflation (Chart I.1.1.d), with price Reference: rigidities leading to prolonged adjustment. Consequently, Joice John, Deepak Kumar, Asish Thomas George, Pratik the projected policy rate path may harden to counter- Mitra, Muneesh Kapur and Michael Debabrata Patra cyclically stabilise the economy (Chart I.1.1.e). The spread (2023), “A Recalibrated Quarterly Projection Model (QPM of the fan charts indicate that the probability distribution 2.0) for India”, Reserve Bank of India Bulletin, February, in these macroeconomic variables is conditional upon the Volume LXXVII(2), pp.59-77. assumption of balanced risks and the change in credit conditions. 26 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 current situation index) for both urban11 and rural12 Recent surveys by other agencies indicate a households improved marginally in September 2025 mixed picture on business expectations relative to vis-à-vis the previous round on account of improved the previous round (Table I.4). In the PMI surveys for sentiments across most of the survey parameters. August 2025, both manufacturing and services firms Although it remains in the pessimistic zone for urban reported improvements in a year ahead sentiment, households, it is in the optimistic zone for rural driven by expectations of stronger demand. households. Professional forecasters polled in September 2025 Consumers’ optimism for the year ahead, measured round of the Reserve Bank’s survey projected real GDP by the future expectations index, strengthened further growth at 6.8 per cent during Q2:2025-26. Growth is for both urban and rural households, remaining in expected around 6.1-6.5 per cent during Q3:2025-26 optimistic territory (Chart I.7). to Q2:2026-27 (Chart I.9). In the Reserve Bank’s quarterly industrial outlook Real GDP growth was higher at 7.8 per cent in survey of July-September 2025, manufacturing firms Q1:2025-26 as compared with 7.4 per cent in Q4:2024- continued to hold an optimistic business outlook 25, mainly driven by robust fixed investment, private (BAI/BEI)13 during Q3:2025-26 (Chart I.8a). The and Government consumption. Taking into account services and infrastructure companies also continue the baseline assumptions, survey indicators and to remain optimistic on overall business situation in model forecasts, real GDP growth is expected at 6.8 per Q3:2025-26 (Charts I.8b and I.8c). cent in 2025-26 with 7.0 per cent in Q2; 6.4 per cent in Chart I.7: Consumer Confidence a. Urban Households b. Rural Households (Index) (Index) 130 125 127.9 120 110 100 96.9 90 100.9 80 70 60 50 40 Sources: Urban Consumer Confidence Survey; and Rural Consumer Confidence Survey, RBI. 11 The Reserve Bank’s urban consumer confidence survey is being conducted in 19 cities since March 2021 (13 cities in the previous rounds) and the results of the September 2025 round are based on responses from 6,068 respondents. 12 The Reserve Bank’s rural consumer confidence survey is being conducted across all Indian states and three major UTs since July 2024 and the results of the September 2025 round are based on responses from 8,848 respondents. 13 Business Assessment Index (BAI)/Business Expectations Index (BEI) gives a snapshot of demand conditions in the manufacturing sector by combining nine parameters – (i) overall business situation, (ii) production, (iii) order books, (iv) inventory of raw material, (v) inventory of finished goods, (vi) profit margin, (vii) employment, (viii) exports and (ix) capacity utilisation. A value above 100 indicates an expansion of the overall business activity and value below 100 indicates contraction. RBI Bulletin October 2025 27 22-yaM 22-luJ 22-peS 22-voN 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 52-luJ 52-peS 130 120 110 100 90 80 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 52-luJ 52-peS Current Situation Index Future Expectations Index Current Situation Index Future Expectations IndexOCTOBER 2025 Monetary Policy Report Chart I.8: Business Assessment and Expectations a. Manufacturing Firms b. Services Firms c. Infrastructure Firms (Index) [Net Response on Overall Business Situation (Per cent)] [Net Response on Overall Business Situation (Per cent)] 140 130 126.3 120 110 110.6 100 Sources: Industrial Outlook Survey; and Services and Infratructure Outlook Survey, RBI. Q3; and 6.2 per cent in Q4 – and risks evenly balanced further escalation in geopolitical tensions; volatility around this baseline path (Chart I.10 and Table I.3). in global financial markets; frequent weather-related Assuming a normal monsoon and no major exogenous disturbances; and supply chain disruptions pose or policy shocks, structural model estimates for 2026- downside risks to the baseline growth path. 27 indicate real GDP growth at 6.6 per cent, with Q1 at I.4 Balance of Risks 6.4 per cent, Q2 at 6.6 per cent, Q3 at 6.8 per cent and The baseline projections of growth and inflation Q4 at 6.5 per cent. are conditional on assumptions relating to key There are upside and downside risks to this domestic and global macroeconomic variables that baseline growth path. The upside risks emanate from revival in private investment; early resolution of global trade related issues; and sustained softening of global commodity prices. On the contrary, increasing trade fragmentation due to protectionist policies; Table I.4: Business Expectations Surveys NCAER Dun and Bradstreet Business Composite Item Confidence Business Index Optimism Index (August 2025) (July 2025) Current level of the index 149.4 117.5 Index as per previous survey 139.3 120.2 % change (q-o-q) sequential 7.3 -2.3 % change (y-o-y) -0.3 4.8 Notes: 1. NCAER: National Council of Applied Economic Research. 2. Dun and Bradstreet Composite Business Optimism Index is for Q2:2025-26 and NCAER Business Confidence Index is for Q1:2025:26. Sources: NCAER and Dun & Bradstreet Information Services India Pvt. Ltd. 28 RBI Bulletin October 2025 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 80 73.2 60 40 37.2 20 0 2022-23 2023-24 2024-25 2025-26 Assessment Expectations Assessment Expectations Assessment Expectations 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 80 67.8 60 40 35.2 20 0 2022-23 2023-24 2024-25 2025-26 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2022-23 2023-24 2024-25 2025-26 Chart I.9: Professional Forecasters' Projection of Real GDP Growth (Per cent) 14 12 10 8 6.8 6.4 6.2 6.1 6.5 6 4 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2023-24 2024-25 2025-26 2026-27 Actual Median projection Sources: Survey of Professional Forecasters, RBI; and National Statistics Office.Monetary Policy Report OCTOBER 2025 pressures could prompt major central banks to keep Chart I.10: Projection of Growth in rates elevated despite weak growth. Global economic Real GDP (y-o-y) (Per cent) outlook is also subject to headwinds from adverse 12 weather shocks and technological disruptions. Given this backdrop, if global growth turns out to 8 be 100 bps below the baseline, domestic growth and 4 inflation could be lower by around 30 bps and 15 bps, respectively. On the upside, a more constructive 0 outcome from trade negotiations resulting in reduced 2023-24 2024-25 2025-26 2026-27 tariffs and a stable framework could bolster global 50 per cent CI 70 per cent CI 90 per cent CI growth. Moreover, growth could improve if major economies work together on policies that stabilise Note: The fan chart depicts uncertainty around the baseline projection path. The baseline projections are conditioned upon the assumptions set out in Table I.2. The prices and strengthen fiscal position, and push thick green shaded area represents 50 per cent confidence interval, implying that there is 50 per cent probability that the actual outcome will be within the range given by the forward structural reforms. On the positive side, thick green shaded area. Likewise, for 70 per cent and 90 per cent confidence intervals, there is 70 per cent and 90 per cent probability, respectively, (cid:31)that the actual outcomes if global growth is higher by 50 bps relative to the will be in the range represented by the respective shaded areas.(cid:31) Source: RBI staff estimates. baseline, domestic growth and inflation could turn out to be higher by around 15 bps and 7 bps, respectively are set out in Table 1.2. These baseline assumptions (Charts I.11a and I.12a). are subject to uncertainties emanating from US trade policies, protracted geopolitical hostilities, volatility (ii) International Crude Oil Prices in global financial markets and adverse weather Global crude oil prices exhibited a declining trend shocks. Against this backdrop, this section explores with Brent crude falling from a high of US$ 77 per the balance of risks around the baseline projections barrel in early-April 2025 to US$ 68 per barrel during of inflation and growth under plausible alternative September 2025. Protracted geopolitical tensions scenarios. resulting in reduced supply, sanctions on major oil (i) Global Growth Uncertainties producing countries, supply shortages due to lower Global economic activity remained steady in investment in new oil projects owing to energy H1:2025, but the driver of growth was mainly the transitions and faster than expected recovery in frontloading of exports. The economic landscape world- global demand may put upward pressure on crude oil wide remains in flux amidst shifting trade pattern prices. In this scenario, if crude oil prices are higher and persisting uncertainty about US trade policies by 10 per cent than the baseline, and assuming full with key partners, posing considerable downside risks pass-through to domestic product prices, inflation to global growth prospects. Additionally, heightened could turn out to be higher by 30 bps and growth may geopolitical tensions could further disrupt global be lower by around 15 bps. Conversely, weak global supply chains and exacerbate upward pressure on demand conditions as discussed above, unwinding of commodity prices. Wider fiscal imbalances or a shift production cuts by OPEC+ countries given effective towards greater risk aversion could push up long-term spare capacity in major producing countries, and interest rates and tighten global financial conditions. quicker resolution of geopolitical conflicts may Along with concerns on geo-economic fragmentations, dampen crude oil prices. If crude oil prices are lower such developments may spark volatility in global by 10 per cent relative to the baseline, inflation could financial markets with spillover effects in emerging be lower by around 30 bps and boosting GDP growth market economies (EMEs). The persistent inflation by 15 bps (Charts I.11a and I.12a). RBI Bulletin October 2025 29 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q CI-Confidence IntervalOCTOBER 2025 Monetary Policy Report Chart I.11: Impact of Risk Scenarios on the Baseline Inflation Path a. Crude Oil Prices and Global Demand Shocks b. Exchange Rate and Food Price Shocks (Per cent) (Per cent) 6.0 5.0 4.0 3.0 2.0 1.0 Higher crude price Lower crude price Global growth slowdown Global growth recovery Baseline Sources: RBI staff estimates. (iii) Exchange Rate may be exacerbated by growing risk aversion on EMEs among global investors. Strengthening of the US dollar Notwithstanding intermittent phases of may also lower the attractiveness of EME assets. Higher appreciation, the Indian Rupee (INR) depreciated international crude oil prices due to sanctions and vis-à-vis the US dollar during April-September 2025, persisting geopolitical tensions may also contribute largely owing to global trade uncertainties and capital outflows. Going ahead, volatility in global financial to weakening of the INR. In this scenario, if INR markets owing to slowing global trade and demand depreciates by 5 per cent over the baseline, inflation may exert downward pressure on the currency. This could be higher by around 35 bps and GDP growth 30 RBI Bulletin October 2025 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2024-25 2025-26 2026-27 Exchange rate depreciation Exchange rate appreciation Higher food inflation Lower food inflation Baseline 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2024-25 2025-26 2026-27 Chart I.12: Impact of Risk Scenarios on the Baseline Growth Path a. Crude Oil Prices and Global Demand Shocks b. Exchange Rate and Food Price Shock (Per cent) (Per cent) 9.0 9.0 8.0 8.0 7.0 7.0 6.0 6.0 5.0 5.0 4.0 4.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2024-25 2025-26 2026-27 2024-25 2025-26 2026-27 Higher crude price Lower crude price Exchange rate depreciation Exchange rate appreciation Global growth recovery Global growth slowdown Higher food inflation Lower food inflation Baseline Baseline Sources: RBI staff estimates.Monetary Policy Report OCTOBER 2025 may benefit by around 25 bps through the exports to adverse weather events may increase food prices. channel in the short term. On the other hand, the These circumstances may result in higher headline Indian rupee has been the least volatile among EMDE inflation by 50 bps vis-à-vis the baseline (Charts currencies, drawing confidence from stable inflation I.11b and I.12b). and resilient growth outlook. Going ahead, these I.5 Conclusion positive sentiments along with greater than expected Domestic economic activity remains resilient monetary policy accommodation by the major central and is expected to maintain momentum, supported banks and improved trade outlook may attract capital by domestic drivers, despite weak external demand. inflows, lending support to the INR. In this scenario, The GST 2.0 reforms are expected to boost private an appreciation of 5 per cent of the INR relative to the consumption and domestic demand. Rising capacity baseline would lead to a moderation in inflation and utilisation, strong corporate and bank balance sheets, GDP growth by around 35 bps and 25 bps, respectively and favourable financial conditions are likely to (Charts I.11b and I.12b). further support investment and growth. India’s (iv) Food Inflation recent credit rating upgrades reflect growing global confidence in the country’s economic resilience Food prices turned deflationary in recent months and growth prospects. Headline inflation has seen due to a sharp fall in vegetable prices owing to subdued significant moderation during H1:2025-26 (up to seasonal uptick, supported by government’s effective August), mainly due to a sharp correction in food supply side measures, and favourable base effect. Soft prices. Inflation expectations of households and prices prevailed across food categories, with pulses professional forecasters have also eased. Inflation is and spices continuing to remain in deflation, while expected to remain broadly aligned with the target, cereal inflation exhibited a pronounced moderation. despite edging up from Q4:2025-26 as favourable base The strong monsoon and the resultant robust kharif effects wane and demand strengthens on the back of sowing, large buffer stocks, and improved prospects policy action. Core inflation is also expected to remain for rabi crops from adequate reservoir levels could keep contained. Nonetheless, risks from adverse weather pressures on food inflation muted. In such a scenario, events, evolving tariff actions, and volatile global headline inflation may moderate by around 50 bps financial markets pose headwinds to growth and relative to the baseline. On the other hand, higher inflation. However, India’s robust macroeconomic than expected momentum in the prices of perishable fundamentals, along with a strong external position, food items and lower agricultural production owing provide resilience against such shocks. RBI Bulletin October 2025 31Monetary Policy Report October 2025 II. Prices and Costs up to 2.1 per cent in August (Chart II.1). The decline in inflation was driven by the food group, as its contribution declined from a large positive to zero Headline CPI inflation continued on a declining between October 20242 and August 2025 (Chart II.2). trajectory during H1:2025-26, except for the pick-up The contribution of the fuel group turned marginally in August. The decline in inflation was driven by the positive from marginally negative while that of the food group as favourable weather conditions and core group (CPI excluding food and fuel)3 registered a increase in production augmented supply. Core moderate increase during this period. inflation remained rangebound around 4 per cent despite rising gold prices exerting significant upside In terms of monthly trajectory of headline CPI during 2025-26, a positive momentum4 was observed pressures. Overall cost conditions remained benign, across successive months during April-August. Up with industrial and farm input cost pressures staying to July, favourable base effects, however, offset its soft and wage pressures remaining muted. impact, leading to a moderation in y-o-y inflation II.1 Introduction (Chart II.3). In the absence of any base effects, y-o-y Headline consumer price index (CPI) inflation1 inflation recorded an increase in August.5 declined for nine consecutive months to reach an The April 2025 MPR projected inflation at 3.8 8-year low of 1.6 per cent in July 2025 before edging per cent in Q4:2024-25 and 3.6 per cent in Q1:2025- Chart II.1: CPI Inflation Chart II.2: Contributors to Decline in Headline Inflation (Y-o-y, per cent) 14 (Percentage points) 12 7 6.2 per cent 10 6 8 5 6 4 4.2 4 4.6 2.4 2 2.1 3 0 0.0 2.1 per cent 0.2 -2 2 -4 1 1.7 1.9 -6 0 -0.1 -1 October 2024 (Recent high) August 2025 Food and beverages Fuel and light CPI excluding food and fuel Sources: National Statistical Office (NSO); and RBI staff estimates. Sources: NSO; and RBI staff estimates. 1 Headline inflation is measured by year-on-year (y-o-y) changes in the all-India consumer price index (CPI) published by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation, Government of India. 2 CPI inflation recorded an intra-year peak of 6.2 per cent in October 2024. 3 Core group CPI, i.e., CPI excluding food and fuel is worked out by eliminating the groups ‘food and beverages’ and ‘fuel and light’ from the headline CPI. 4 A change in CPI year-on-year (y-o-y) inflation between any two months is the difference between the current month-on-month (m-o-m) change in the price index (momentum) and the m-o-m change in the price index 12 months earlier (base effect). For more details, see Box I.1 of the MPR, September 2014. 5 Headline CPI remained unchanged between July and August 2024, leading to no base effect for August 2025. 32 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA Tolerance band Headline Food and beverages Fuel and light Target CPI excluding food and fuelChapter II Prices and Costs Chart II.3: Change in CPI Headline Inflation: Momentum and Base Effects (Percentage points) 3 2 1 0.5 0.5 0 -1 -2 -3 Sources: NSO; and RBI staff estimates. 26 (Chart II.4).6 The actual outcomes turned out in October 2024 to (-) 0.8 per cent (y-o-y) in July 2025. to be lower than projections for Q1:2025-26 by 90 The decline in food inflation for nine consecutive bps. Realised inflation lower than projections was months up to July, a first in the current CPI series primarily on account of faster than expected as well (CPI:2012=100), was the largest both in terms as a more protracted decline in food prices during of magnitude and duration (Table II.1). This was the winter, which extended up to April, the longest marked by two distinct phases. During November (9 months) and steepest (10.5 per cent) consecutive 2024-April 2025, prices declined in absolute levels decline in prices in the current CPI series. Thereafter, (negative momentum), which drove the overall milder than usual summer temperatures dampened decline in CPI headline inflation. Since May, the extent of price reversals during the summer although food prices recorded a seasonal pick- months, as reflected in below historical average price up, large favourable base effects offset the muted build-up leading to lower-than-expected realised positive momentum to keep y-o-y inflation on inflation in Q1 and Q2:2025-26 so far. a declining trajectory (Chart II.5a). In August, a positive momentum and an unfavourable base effect II.2 Developments across Major Components of the CPI Table II.1: Major Episodes of Decline in Food Inflation CPI Food Group Period* Cumulative Decline No. of Months Food and beverages group7 witnessed a sharp (Percentage points) decline in inflation from a peak of 9.7 per cent (y-o-y) Nov-2024 to July-2025 -10.5 9 Dec-2013 to Feb-2014 -8.5 3 6 The Reserve Bank of India (RBI) Act, 1934 (amended in 2016) enjoins Nov-2020 to Jan-2021 -7.4 3 the RBI to set out deviations of actual inflation outcomes from projections, Aug-2014 to Nov-2014 -6.7 4 if any, and explain the underlying reasons thereof. 7 With a weight of 45.9 per cent for food and beverages group in the Aug-2016 to Jan-2017 -6.6 6 overall CPI-Combined basket, developments in food inflation have a major Note: *Includes episodes with more than 5 per cent cumulative decline. impact on the overall inflation trajectory. Sources: NSO; and RBI staff estimates. 3333 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA Chart II.4: CPI Inflation: Projection versus Actual (Y-o-y, per cent) 4.0 3.8 3.7 3.6 3.5 3.0 2.7 2.5 2.0 1.5 1.0 0.5 0.0 Q4:2024-25 Q1:2025-26 M-o-m change Base effect Monthly change in y-o-y inflation (per cent) April 2025 MPR projection Actual Sources: NSO; and RBI staff estimates.Monetary Policy Report October 2025 Chart II.5: CPI Food Inflation a. CPI Food and Beverages b. Price Build-up in CPI Food and Beverages (Percentage points) (Per cent) 10 8 6 4 3.3 2 0 -2 Sources: NSO; and RBI staff estimates. together led to food prices coming out of deflation, management, led the decline in food inflation. recording near-zero inflation. Overall, during 2025- Notably, the absence of extreme weather events till 26 (up to August), the build-up in prices has been August restricted the extent of volatility typically below both last year’s trend and historical average associated with food inflation. An analysis of food (Chart II.5b). price cycles in India shows that there are considerable A combination of favourable supply-side factors, swings in food inflation, with downturns being longer such as comfortable stocks of foodgrains on higher than upswings, while the amplitudes of upward domestic production, wholesale market arrivals, movements are greater than those of downward favourable trade policies and proactive supply movements (Box II.1). Box II.1: Sharp Rise and Slow Fade: Nature of Food Inflation Cycles in India Food prices in India exhibit significant volatility while identified through estimating local peaks and troughs witnessing periods of booms and slumps.8 A number by the following equations: of studies have characterised the nature of food price P max P k = 1, 2, ….,m, where m is set to 12 volatility in the Indian context, although very few have t,peak t k covered on the nature of cycles in food price inflation in P = min( P± ), k=1, 2, ….,m, where m is set to 12 t,trough t k India (Sekhar et al., 2018). Based on identified turning Based o =n the ( lo±c )a ,l peaks and troughs, duration and points using cycle dating literature (Bry and Boschan, amplitudes of phases (booms and slumps) and full 1971) and subsequent refinements (Cashin et al., 2002; cycles [peak-to-peak (PP) and trough-to-trough (TT)] are World Bank, 2025), the nature of food inflation cycles marked off. Boom is defined as the duration in months in India is examined for the period January 2012 to between trough to peak, while slump is the duration June 2025. Turning points for food inflation cycles are in months between peak to trough. The full cycle PP is (Contd.) 8 Boom refers to price spikes. 34 rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raM 0.6 0.3 0.0 2023-24 2025-26 M-o-m change Base effect Y-o-y inflation (per cent) 2024-25 Average: 2017-18 to 2022-23 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 12.0 10.0 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0Chapter II Prices and Costs defined as slump followed by boom, while a cycle TT Bank, 2025). Conversely, booms are often sharp but is defined as boom followed by a slump. Amplitude is transient, as they are frequently induced by sudden the magnitude of price movements during the phase of supply-side disruptions such as extreme weather events boom and slump measured as log differences. or geopolitical shocks. Full cycles are characterised as PP and TT, with an average duration of 40 months each. Price Cycles and Turning Points Booms have an average amplitude of 17 per cent, far Since January 2012, food inflation in India has surpassing the slumps’ amplitude of 9 per cent (Chart exhibited recurrent cycles, witnessing five troughs II.1.2b). The amplitudes of TT and PP are comparable and four peaks (Chart II.1.1a). At any particular month, for full cycles, and the wide interquartile ranges signify certain food sub-groups’ prices may be in a boom phase variable intensities of full cycles. while others may be in a slump phase. A weighted Cycle Characteristics across Food Sub-groups share of sub-groups in slumps and booms reveals that, Booms are characterised by a greater amplitude than on average, 45 per cent were in a boom phase while slumps across all sub-groups. Pulses and products, 55 per cent were in a slump phase in any given month and vegetables have experienced a larger amplitude (Chart II.1.1b). Over the sample period, however, this and substantial variation. Slumps endure longer than exhibited large variation, with the share of food sub- booms across different food sub-groups, barring pulses groups in the boom phase peaking at 86 per cent in July and products, vegetables, spices, and fruits. Full cycle 2012, while the slump phase share surpassed 91 per durations show that PP cycles across various food sub- cent in May 2017 and June 2025. groups exceed the duration of TT cycles. Duration and Amplitude of Cycles Overall, the nature of food price cycles shows that Booms last an average of 18 months while slumps downturns typically surpass upswings in terms of persist for 21 months (Chart II.1.2a). Factors such as duration, but the amplitudes are greater for upward vis- productivity gains that lead to increased supply over à-vis downward movements. For most food sub-groups, time, which in turn results in sustained low inflation downturns persist longer than upturns, barring pulses could contribute to larger duration of slumps (World and products, fruits, spices and vegetables, which record Chart II.1.1a. CPI Food and Beverages Inflation Chart II.1.1b. Weighted Share of Sub-groups (Y-o-y, per cent) in Booms and Slumps 20 15 10 5 0 - 0.2 -5 Inflation Peaks Troughs Note: Data is from January 2012 to June 2025. Sample includes 12 CPI Food subgroups. Sources: NSO; and RBI staff estimates. (Contd.) 3355 21-naJ 31-naJ 41-naJ 51-naJ 61-naJ 71-naJ 81-naJ 91-naJ 02-naJ 12-naJ 22-naJ 32-naJ 42-naJ 52-naJ 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 21-naJ 31-naJ 41-naJ 51-naJ 61-naJ 71-naJ 81-naJ 91-naJ 02-naJ 12-naJ 22-naJ 32-naJ 42-naJ 52-naJ Booms SlumpsMonetary Policy Report October 2025 Chart II.1.2a. Duration of Phases and Full Cycles Chart II.1.2b. Amplitude of Phases and Full Cycles (Months) (Per cent) 60 30 50 25 40 20 30 15 20 10 10 5 18 21 40 40 17 9 16 17 0 0 Booms Slumps Booms Slumps Peak-to-peak Trough-to-trough Peak-to-peak Trough-to-trough Note: Black whiskers indicate interquartile range. Sources: NSO; and RBI staff estimates. prolonged boom phases. Boom amplitudes consistently G. Bry and C. Boschan, 7-63. Cambridge, MA: National exceed slumps across all sub-groups. Intensity of Bureau of Economic Research. price fluctuations across various sub-groups could be Cashin, P., McDermott, C. J. and Scott, A. 2002. Booms driven by divergent factors viz., weather patterns for and Slumps in World Commodity Prices. Journal of vegetables, temperature variations for eggs and poultry Development Economics, 69 (1):277-96. and global price cycles for edible oils, and pulses where Sehkar, C.S.C., D. Roy, and Y. Bhatt. 2018. Food Inflation our import dependency is high. and Volatility in India: Trends and Determinants. References Indian Economic Review, 53 (1/2): 65-91. Bry, G. and Boschan, C. 1971. Programmed Selection World Bank (2025). Post Pandemic Commodity Cycles, A of Cyclical Turning Points. In Cyclical Analysis of Time New Era? Special Focus, Commodity Markets Outlook, Series: Selected Procedures and Computer Programs, April. At the sub-group level, vegetables, pulses and arrivals in wholesale markets for short-duration cereals witnessed a sharp moderation in inflation crops, bolstered by favourable weather conditions, (Chart II.6). Vegetables sub-group9 exhibited an such as a less intense summer, further contributed unusually muted and delayed summer season uptick to the precipitous decline in vegetables inflation in prices, not just confined to TOP (tomatoes, onions (Chart II.7b). and potatoes), but also other vegetables, resulting Among key vegetables, viz., TOP11, prices in a y-o-y deflation of (-) 15.9 per cent in August were significantly lower during April-August 2025 (Chart II.7a). Robust domestic production in 2024- as compared with a year ago.12 Fewer weather 2510 of longer-duration crops and record high fresh 11 Tomato, onion and potato together constitute 36.5 per cent of CPI 9 Vegetables sub-group has a weight of 6.0 per cent in the overall CPI and vegetables index. 13.2 per cent in the food and beverages group. 12 Tomato, onion and potato prices were 21.5 per cent, 24.6 per cent and 10 6.0 per cent higher for vegetables, over 2023-24, as per Second Advance 27.3 per cent lower, respectively, during April-August 2025 as compared Estimates (AE). with the corresponding period of the previous year. 36Chapter II Prices and Costs disruptions led to steady availability of tomatoes vegetables in 2025-26 so far was also lower in wholesale markets.13 The price build-up among in comparison to last two years (Chart II.7c). Chart II.7: CPI Vegetables Inflation a. Drivers b. Market Arrivals of Vegetables* (Percentage points) (Million metric tonnes) 50 30 10 -10 -30 -15.9 c. Price Build-up d. Volatility (Standard Deviation) (Per cent) (Per cent) Notes: 1. *: Data pertain to cumulative arrivals during April-August for each year. 2. Other vegetables include beans, brinjal, cabbage, carrot, cauliflower, dhania, garlic, ginger, gourd, green chillies, okra, lemon, parwal, peas and spinach. 3. Figures in parentheses indicate items' weights in CPI-Vegetables sub-group. Sources: NSO; Agmarknet; and RBI staff estimates. 13 Although there are reports of crop losses on account of flash floods in many producing areas such as Himachal Pradesh, daily data on retail prices from Department of Consumer Affairs (DCA) is yet to show any significant pick-up in prices in September. 3377 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA 25 23 60 20 40 15 20 10 0 5 -20 0 -40 Potato (16.3) Onion (10.7) Tomato (9.5) Other vegetables (63.5) Potato Onion Tomato Other vegetables Vegetables (y-o-y, per cent) All vegetables (y-o-y, per cent; right scale) All vegetables 20 19.0 16 12 10.0 11.3 8 6.5 5.7 6.1 4 4.0 2.7 3.3 3.9 4.6 3.6 0 Average 2023 2024 2025 2015-22 (Apr-Aug) (Apr-Aug) (Apr-Aug) (Apr-Aug) Vegetables TOP Non-TOP 4102 5102 6102 7102 8102 9102 0202 1202 2202 3202 4202 5202 60 50 40 30 20 10 19.4 0 -10 rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raM Chart II.6: Food Sub-group-level Inflation (Per cent) Food Sub-groups Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Vegetables (13.2) Pulses and Products (5.2) Cereal and Products (21.1) Fruits (6.3) Sugar and Confectionery (3.0) Egg,meat and fish (8.8) Prepared Meals (12.1) Milk and Products (14.4) Non-alcoholic Beverages (2.8) Spices (5.5) Oils and Fats (7.8) less than (-)10 per cent 0 to 4 per cent 6 to 10 per cent (-)10 to 0 per cent 4 to 6 per cent greater than 10 per cent Note: Width of each row reflects the corresponding weight in the CPI food and beverages group (given in parantheses). Sources: NSO; and RBI staff estimates. 2023-24 2024-25 2025-26 Average: 2017-18 to 2022-23Monetary Policy Report October 2025 The price volatility in vegetables sub-group and TOP Chart II.9: Cereals Inflation during April-August 2025 was also low (Chart II.7d). (Y-o-y, per cent) 16 Pulses14, the primary source of plant-based protein, was the other sub-group which recorded a 14 double-digit deflation [(-)14.5 per cent in August 2025]. 12 Pulses inflation has corrected on a sustained basis 10 from June 2024 amidst augmented availability, 8 primarily supported by government interventions 6 and imports. According to Directorate General of 4 4.3 Commercial Intelligence and Statistics, imports of 2.7 pulses scaled a record 7.3 million metric tonnes in 2 1.0 2024-25, a 54 per cent increase from a year ago. Higher 0 domestic production (4.1 per cent increase in 2024-25) and ample stocks also contributed to the moderation in Cereals and products Rice Wheat/Atta prices. Pulses prices continued to correct during 2025- Sources: NSO; and RBI staff estimates. 26 so far, contrary to the gradual pick-up witnessed during the previous years (Chart II.8). per cent in 2024-25) and high buffer stocks (3.5 times Cereals15 was the third major sub-group which the norm as on September 16, 2025), contributed to contributed to the fall in food inflation, as inflation in the moderation in inflation. Wheat inflation softened this category declined to 2.7 per cent in August 2025 from a recent high of 9.2 per cent in February 2025 (lowest since December 2021) from 7.3 per cent a year to 4.3 per cent in August, aided by record production ago (Chart II.9). Record rice production (higher by 8.2 (3.7 per cent increase in 2024-25), comfortable buffer 14 Pulses sub-group has a weight of 2.4 per cent in the CPI and 5.2 per cent in the food and beverages group. 15 Cereals sub-group has a weight of 9.7 per cent in the CPI and 21.1 per cent in the food and beverages group. 38 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA Chart II.8: CPI Pulses and Products Inflation a. Contribution of Major Items b. Cumulative Price Build-up (Percentage points) (Per cent) 25 20 15 10 5 0 -5 -10 -15 -14.5 -20 2023-24 2025-26 2024-25 Average; 2017-18 to 2022-23 Sources: NSO; and RBI staff estimates. 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA 25 20 16.6 15 10 5 3.0 0 -2.6 -5 -6.5 -10 Urad Tur Masur Other pulses and products Moong Pulses and products (y-o-y, per cent) Gram rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raMChapter II Prices and Costs Chart II.10: CPI Edible Oils and Fats Inflation a. Edible Oil Prices: Domestic and Global b. Drivers of CPI Oil and Fats Inflation (Y-o-y change, per cent) (Percentage points) 25 60 21.2 20 40 15 10 10.0 20 5 0 0 -5 3.9 -20 -10 -40 -15 -20 -60 Notes: 1. #: Refined oil includes sunflower, soybean, saffola etc. 2. *: Includes groundnut oil and fats (ghee, butter, vanaspati / margarine) Sources: World Bank Pink Sheet; NSO; and RBI staff estimates. stocks (1.2 times the norm as on September 16, 2025) Fruits18 sub-group recorded double-digit and continued export restrictions. inflation consistently since January 2025. The price pressures were predominantly from coconut, as While overall food inflation remained on a high temperatures and unseasonal rains led to lower declining trajectory, 'oils and fats' and fruits sub- production. Apple prices have also hardened during groups witnessed a contrarian trend. 'Oils and December 2024 to July 2025 (Chart II.11). fats'16 inflation rose significantly to 21.2 per cent in August 2025 (Chart II.10). This was primarily driven by an increase in international palm oil prices, partly on account of an increased bio-diesel mandate in Indonesia exacerbating global demand- supply imbalance. Despite a 10-percentage points import duty cut on crude edible oil effective from the end of May 2025, prices did not witness any major correction as supply concerns amid geopolitical escalations offset the impact. Among domestically produced oilseeds, mustard and rapeseed and coconut recorded a decline in production in 2024-2517, adding to the price pressure. Ghee and butter price inflation, however, remained relatively moderate, driven by lower inflation in milk prices. 16 With a weight of 3.6 per cent in the CPI and 7.8 per cent within the food and beverages group. 17 Mustard and rapeseed production declined by (-) 4.9 per cent in 2024-25 as per third AE of crop production. Coconut production declined by (-) 4.6 per cent in 2024-25 as per Second AE of horticulture production. 3399 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA 25 21.2 20 15 10 5 0 -5 -10 -15 -20 -25 CPI oils and fats Global palm oil (right scale) Global oils and meals (right scale) 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA Mustard oil Coconut oil Refined oil# Others* Oils and fats (y-o-y, per cent) Chart II.11: Drivers of CPI Fruits Inflation (Percentage points) 20 15 11.7 10 5 0 -5 Notes: 1. #: Includes coconut, green coconut, and copra. 2. *: Includes dates, cashewnut, walnut, other nuts, raisin etc. 3. Figures in parantheses indicate items’ weights in CPI-Fruits sub-group. Sources: NSO; and RBI staff estimates. 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA Banana (19.4) Groundnut (9.9) Mango (11.1) Coconut# (14.1) Other fruits (21.0) Other dry fruits* (8.2) Apple (16.3) Fruits (y-o-y, per cent) 18 With a weight of 2.9 per cent in the CPI and 6.3 per cent within the food and beverages group.Monetary Policy Report October 2025 Among other food items, spices continued to Chart II.12: CPI Fuel Group Inflation remain in deflation. Animal-based protein inflation (Y-o-y, per cent) 15 declined marginally driven by lower prices of egg and 10 meat. Prepared meals and non-alcoholic beverages, 6.1 on the contrary, have registered a gradual increase 5 2.4 2.0 0 in inflation during April-August 2025 over the 2.0 -5 corresponding period of last year. -5.0 -10 CPI Fuel Group -15 CPI fuel group came out of deflation in March -20 2025, recording a first positive print of y-o-y inflation -25 after 18 months (Chart II.12). Despite a subsequent -30 uptick in CPI fuel inflation on account of the hike in LPG prices by ₹50 per cylinder effective April 8, 2025, inflation remained in the range of 2.4-2.9 per cent during April-August 2025. Kerosene group largely remained in deflation, reflecting subdued international prices. Subsidised kerosene prices in metro cities were lowered thrice during April-June but were hiked again in July and August (Chart II.13). In May 2025, electricity tariff announcements by a number of states led to a spike in the electricity index. On a y-o-y basis, however, it moderated from 5.4 per cent in March to 2.0 per cent in August 2025 as the magnitude of increases were lower than that in the previous year. 40 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-nuJ 52-luJ 52-guA Electricity (33.0) LPG (excl. conveyance) (18.8) Kerosene (8.0) Other fuel (36.7) CPI fuel and light Note: Figures in parentheses indicate item's weights in CPI-fuel group. Sources: NSO; and RBI staff estimates. Core CPI (CPI excluding Food and Fuel) Core inflation (CPI excluding food and fuel) during April-August 2025 averaged 4.2 per cent, higher than 3.2 per cent recorded a year ago. In terms of monthly trajectory, it edged up to 4.2-4.4 per cent in April-June 2025 from 4.1 per cent in March, before moderating to 4.1-4.2 per cent in July-August. A major driver of core inflation this year has been the 80 70 60 50 48.1 44.3 40 30 Kerosene - International Kerosene - Domestic (subsidised) LPG - International LPG - Domestic Notes: 1. The international price for LPG is based on spot prices for Saudi Butane and Propane, combined in the ratio of 60:40 respectively. These international product prices are indicative import prices. Further details are available at www.ppac.org.in. 2. The indicative international price for kerosene is the Singapore Jet Kero spot price. 3. The domestic prices of LPG and kerosene represent the average prices of four and three metros, respectively, as reported by Indian Oil Corporation Limited (IOCL). Sources: Bloomberg; IOCL; and RBI staff estimates. 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 52-luJ 52-peS 1200 1000 863.3 800 600 629.1 400 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 52-luJ 52-peS Chart II.13: Domestic and International Fuel Prices a. Kerosene b. LPG (₹ per litre) (₹ per 14.2 kg cylinder)Chapter II Prices and Costs rise in gold prices, which is part of the 'personal care Chart II.15: CPI Inflation excluding Food and effects' sub-group. Between March and August and Fuel: Persistence [In(cid:28)lation (y-o-y, per cent), x-axis; 2025, gold prices rose by 14.7 per cent pushing its cross-sectional standard deviation, y-axis] contribution to core inflation to 117 bps in August. 18 Rise in international gold prices, driven by heightened 16 global economic and geopolitical uncertainty that 14 12 encouraged safe haven buying and sustained demand 10 for gold as a financial asset by central banks and 8 investors, drove domestic price increases. Housing, 6 health, and transport and communication remained 4 the other major contributors to core inflation 2 (Chart II.14). 0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Although core inflation during April-August 2025 2020-21 (Jun-Feb) 2021-22 (Jun-Mar) 2022-23 (Apr-Mar) was higher than a year ago, its volatility remained 2023-24 (Apr-Mar) 2024-25 (Apr-Mar) 2025-26 (Apr-Aug) comparable to last year. Both the level and variability Note: Each dot represents a month, plotting the y-o-y inflation level (x-axis) against the cross-sectional standard deviation across all items (y-axis). Dots with of core inflation, however, remained below those seen the same colour correspond to months within the same financial year. Sources: NSO; and RBI staff estimates. in the immediate post-COVID years (Chart II.15). Other to 3.1 per cent in August, 103 bps below conventional exclusion-based measures of underlying inflation, core inflation (i.e., excluding food and fuel). which exclude items such as petrol, diesel, gold and Decomposing CPI inflation excluding food, fuel, silver in addition to food and fuel recorded a similar petrol, diesel, gold, and silver into its goods and trajectory (Table II.2). Inflation in CPI excluding food, services components19 shows that goods inflation fuel, petrol, diesel, gold and silver components eased Table II.2: Exclusion-based Measures of Inflation (y-o-y, per cent) Chart II.14: Contribution to CPI Core Inflation (Percentage points) Period CPI excluding CPI excluding CPI excluding food food and fuel food fuel petrol fuel petrol diesel CPI excluding food fuel (47.3) diesel (45.0) gold silver (43.8) (y-o-y, per cent) 4.2 of which Aug-24 3.3 3.5 3.0 Sep-24 3.5 3.8 3.2 Transport and communication (18.2) 0.5 Oct-24 3.8 4.0 3.3 Health (12.5) 0.6 Nov-24 3.7 3.9 3.3 Clothing and footwear (13.8) 0.4 Dec-24 3.6 3.9 3.3 Housing (21.3) Jan-25 3.6 3.9 3.2 0.7 Household goods and services (8.0) 0.2 Feb-25 4.1 4.3 3.4 Mar-25 4.1 4.3 3.3 Personal care and effects (8.2) 1.3 Apr-25 4.2 4.4 3.5 Education (9.4) 0.4 May-25 4.2 4.3 3.4 Others* (8.6) 0.2 Jun-25 4.4 4.6 3.5 Core goods (51.3) Jul-25 4.1 4.2 3.2 2.4 Aug-25 4.2 4.3 3.1 Core services (48.7) 1.8 Notes: 1. Figures in parentheses indicate weights in CPI. Average: 2017-18 to 2019-20 2024-25 2025-26 (Apr-Aug) 2. Derived as a residual from headline CPI. Sources: NSO; and RBI staff estimates. Notes: 1. Figures in parentheses indicate weights in CPI excluding food and fuel. 2. *: Includes Pan, tobacco and intoxicants; and Recreation and 19 Goods component in CPI excluding food, fuel, petrol, diesel, gold and amusement. Sources: NSO; and RBI staff estimates. silver has a weight of 20.7 per cent in the headline CPI and that of services component is 23.0 per cent. 4411Monetary Policy Report October 2025 Chart II.16: Contributions to CPI Inflation excluding Food, Fuel, Petrol, Diesel, Gold, and Silver a. Goods b. Services (Percentage points) (Percentage points) 6 5 4 3 2.9 2 1 0 -1 Personal care and effects Health Recreation and amusement Transport and communication Clothing and footwear Education Household goods and services Pan, tobacco and intoxicants Goods inflation (y-o-y, per cent) [20.7] Notes: 1. Figures in parentheses indicate weights in CPI. 2. *: Represents balancing item to reconcile divergence in CPI index between CPI items indices aggregated vertically, across items and the published sub-group/group/overall CPI index. Sources: NSO; and RBI staff estimates. remained steady around 2.9 per cent for the last one year while services inflation recorded a gradual uptick till June. However, there was a sharp decline in the services inflation from 4.1 per cent in June to 3.3 per cent in August driven by a huge favourable base effect which was most prominent in the transport and communication sub-group on account of the mobile tariff hike of July 2024. Core services inflation was at 3.3 per cent in August 2025 (Chart II.16). II.3 Decoding the Inflation Dynamics Statistical Properties Statistical properties of inflation provide insights into the nature of inflation dynamics, both in terms of the trajectory and underlying changes in trend. The distribution of CPI inflation in 2025 so far (January-August 2025) vis-à-vis 2024 indicates a relatively milder positive skew, reflecting a broad- based easing of price pressures. The distribution also recorded a narrowing in width, suggesting reduced inflation volatility among sub-groups (Chart II.17). In terms of monthly trajectory, the decline in inflationary pressures since April has been 42 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA 6 5 4 3.3 3 2 1 0 -1 Transport and communication Housing Personal care and effects Health Recreation and amusement Clothing and footwear Household goods and services Education Services inflation (y-o-y, per cent) [23.0] Others* 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA accompanied by a widening of the inflation divergence across quantiles (Chart II.18). The widening of inflation divergence across CPI sub-groups highlights the role of a few sub-groups in driving headline numbers to ultra-low levels. Other measures of underlying inflation such as the trimmed mean measures and the weighted median20 remained at a much lower level than CPI excluding food and fuel inflation (Table II.3). In terms of trajectory, they remain largely aligned with the conventional core inflation. Diffusion indices21 generally moderated during 2025-26 so far except in July and August, indicating 20 While exclusion-based measures drop a fixed set of volatile items (for example, food and fuel) in each period, trimmed measures exclude items located in the tails of the inflation distribution - items displaying changes more than the specified threshold in prices each month are excluded, and the items dropped differ from month to month. The weighted median inflation rate is defined as the inflation rate corresponding to the item that lies at the 50th percentile in the distribution of price changes within the CPI basket, weighted using CPI weights. 21 The CPI diffusion index, a measure of dispersion of price changes, categorises items in the CPI basket according to whether their m-o-m seasonally adjusted prices have risen, remained stagnant or fallen over the previous month. The higher the reading above 50, the broader is the expansion or generalisation of price increases; the further is the reading below 50, the broader is the price decline across items.Chapter II Prices and Costs Chart II.18: CPI Sub-Group/ Group Inflation Range (y-o-y, per cent) 12 10 8 6 4 2 2.1 0 -2 10th to 90th percentile CPI headline Target Sources: NSO; and RBI staff estimates. that the number of items within CPI experiencing price pressures are also on the decline across both goods and services components (Chart II.19a). This is also corroborated by the low share of items with high inflation (above 6 per cent) in the CPI basket, which in August stood at 15.5 per cent, the lowest since August 2017 (Chart II.19b). 22 The CPI weighting diagrams use the modified mixed reference period (MMRP) data based on the 2011-12 Consumer Expenditure Survey conducted by the National Sample Survey Office. Under MMRP, data are collected on expenditure incurred during the last seven days for frequently purchased items like edible oil, eggs, fish, meat, vegetables, fruits, spices, beverages, processed foods, pan, tobacco and intoxicants; expenditure incurred during the last 365 days for items like clothing, bedding, footwear, education, medical (institutional), durable goods; and expenditure incurred in the last 30 days for all other food, fuel and light, miscellaneous goods and services including non-institutional medical services, rents and taxes. 4433 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA Chart II.17: Average CPI Inflation (y-o-y) (Kernel Density Estimates) 0.16 0.14 0.12 0.10 0.08 0.06 0.04 0.02 0.00 -20 -10 0 10 20 30 Inflation (per cent) 2017 to 2019 (Jan-Aug) 2024 (Jan-Aug) 2025 (Jan-Aug) Note: Kernel density estimation is a statistical technique that creates a smooth estimate of a probability density function from a dataset by summing up localized kernel functions centered on each data point. Sources: NSO; and RBI staff estimates. Inflation across goods and services Another measure to gauge the underlying inflation dynamics is to classify the products across goods (both perishable and non-perishable) and services22. Goods (with a weight of 76.6 per cent in the overall CPI) contributed to around 70 per cent of headline inflation between March and May 2025 but their contribution dropped to around 53 per cent in June and July 2025. The negative contribution of perishable Table II.3: Measures of Underlying Inflation: items, including vegetables, spices, fruits and other Trimmed Mean Measures and Weighted Median food items such as milk, meat and fish and prepared (y-o-y, per cent) meals, drove this moderation. The contribution of Month 5% 10% 25% Weighted semi-perishables consisting of cereals, pulses, and trimmed trimmed trimmed Median Aug-24 3.9 3.7 3.3 3.0 personal care to overall inflation remained broadly Sep-24 4.4 3.9 3.5 3.0 stable till July, while that of durables rose, primarily Oct-24 4.6 4.1 3.5 3.0 reflecting the surge in gold prices. The trends, Nov-24 4.6 4.1 3.5 3.2 Dec-24 4.5 4.1 3.5 3.1 Jan-25 4.1 3.7 3.4 2.9 Feb-25 3.7 3.5 3.3 2.9 Mar-25 3.6 3.4 3.2 2.9 Apr-25 3.3 3.4 3.3 3.0 May-25 3.1 3.3 3.3 3.2 Jun-25 2.8 3.1 3.1 3.1 Jul-25 2.7 3.0 3.1 3.0 Aug-25 2.9 2.9 2.9 2.9 Sources: NSO; and RBI staff estimates.Monetary Policy Report October 2025 Chart II.19: CPI Diffusion Indices (M-o-M Seasonally Adjusted) a: CPI Headline, Goods and Services b. Cumulative Weight of Items Across (Index) Inflation Ranges 100 (Per cent) 91.8 90 80 74.7 70 69.5 60 50 40 30 20 10 0 CPI headline CPI goods CPI services Sources: NSO; and RBI staff estimates. however, reversed in August 2025 with contribution of goods inflation (driven by perishables) climbing up to 62.5 per cent of headline inflation, even as the contribution of semi-perishables and durables came down. Meanwhile, services (with a weight of 23.4 per cent) saw their contribution increase from around 26 per cent in March to 48 per cent in July, before moderating to 37.5 per cent in August (Chart II.20). 44 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA 100 90 80 70 60 50 40 30 20 10 0 <2 per cent 2-4 per cent 4-6 per cent >6 per cent 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA Chart II.20: Contribution of Goods and Services (Percentage points) 8 7 6 5 4 3 2 2.1 0.7 1 0.8 0.4 0 0.2 -1 Non-durable 7 days recall (34.8) Services (23.4) Non-durable 30 days recall (31.3) Durable (10.5) CPI headline inflation (y-o-y, per cent) Others* Notes: 1. Figures in parentheses indicate weights in CPI. 2. *: Represents balancing item to reconcile divergence in CPI between CPI items indices aggregated vertically, across items and the published sub-group/group/overall CPI. Sources: NSO; and RBI staff estimates. 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA Regional Trends in Inflation Turning to inflation trajectory across regions, both urban and rural areas have been experiencing a sustained easing since October 2024. The higher weight of food in the rural CPI basket, coupled with a larger magnitude of decline in food inflation, resulted in rural inflation remaining below urban levels since March 2025 (Chart II.21). There was a marked decline in the number of states witnessing high inflation during April–August 2025 as compared with the corresponding period of last year. 30 out of the 36 States/UTs recorded inflation below 4 per cent during this period (Table II.4). One state, Kerala, where headline inflation has risen sharply in recent months, devotes a larger share of their consumption basket to coconut and coconut oil23, prices of which have increased meteorically.24 23 As per the Household Consumption Expenditure Survey 2011-12 (basis of current CPI 2012=100), adjusted for differences in state-level Monthly per Capita Expenditure (MPCE) relative to the All-India MPCE, coconut consumption in Kerala is about 6 times more than the all-India consumption, whereas coconut oil consumption in Kerala is about 16 times more than the all-India consumption. 24 Coconut and coconut oil recorded an average inflation of 52.0 per cent and 102.1 per cent during April-August 2025.Chapter II Prices and Costs Chart II.21: CPI Headline Inflation: Urban and Rural Table II.4: Distribution of Headline Inflation (Y-o-y, per cent) across States/UTs: Number of States# 8 Headline Inflation Range 2024-25 2025-26 7 (Per cent) (Apr-Aug) (Apr-Aug) Between 0 to 2.0 3 14 6 Between 2.0 to 4.0 14 16 5 Between 4.0 to 6.0 18 5 Greater than 6.0 1 1 4 Note: # Accounted for the unification of Daman and Diu with Dadra & 3 Nagar Haveli and the formation of Ladakh as a Union Territory. 2.5 Sources: NSO; and RBI staff estimates. 2 1.7 moderation in international commodity prices, barring 1 that of precious metals, contributed significantly to 0 this moderation. Among industrial inputs, aviation turbine fuel, high-speed diesel, naphtha, and furnace oil prices witnessed a decline in inflation. For farm Rural Urban inputs, deflation is led by declining prices of diesel Sources: NSO; and RBI staff estimates. and fertilisers. II.4 Drivers of Inflation Trajectory Rural labour cost, reflected in nominal rural wage While the disaggregated analysis provides a growth was range-bound between 6.4-6.6 per cent in commodity level understanding of inflation dynamics, Q1:2025-26, with agricultural wages recording a faster the drill down into factors that condition the overall growth (Chart II.24). Growth in agricultural wages was inflation trajectory such as imported inflation, costs, broad-based across occupations with seasonal uptick wages and other macroeconomic factors provide seen for horticultural workers, harvesting and picking insights into the underlying drivers of inflation. workers, inland fishermen, and ploughing/tilling workers. Real rural wages (deflated by CPI rural index) Imported Inflation increased at a faster rate as inflation moderated. The contribution of imported components25 to headline inflation remained modest till July 2025 on the back of moderate energy prices26, despite a sharp uptick in the global prices of gold and silver. The uptick seen in August 2025 was mainly driven by gold, silver, and edible oils (Chart II.22). Costs Input cost inflation, as measured by Wholesale Price Index (WPI) inflation in industrial raw materials and farm inputs, recorded deflation during April to August 2025 (Chart II.23). The pass-through of 25 Global commodities that drive domestic prices include petroleum products; coal; electronic goods; gold; silver; chemical products; metal products; textiles; cereals; milk products, and vegetables oils – these together have a weight of 36.4 per cent in the CPI basket (adjusted weights based on pass-through from international prices is at 8.4 per cent). 26 Lower International crude petroleum, kerosene, propane and butane prices. 4455 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA Chart II.22: Contribution of Imported Inflation to Headline Inflation (Percentage points) 10 8 6 4 2 2.1 1.3 0 0.8 -2 -4 Imported inflation Domestically generated inflation CPI headline inflation (y-o-y, per cent) Sources: NSO; and RBI staff estimates. 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guAMonetary Policy Report October 2025 Chart II.24: Wage Growth and Inflation in Rural Areas (Y-o-y, per cent) 10 9 8 7.5 7 6.6 6 5.8 5 4 3 2 1 0 CPI Rural CPI Agricultural Labourers Agricultural Labourers* Non Agricultural Labourers** CPI Rural Labourers Average Rural Wage Notes: 1. Data for CPI-Agricultural Labourers and CPI-Rural Labourers during May-July 2025 pertains to the rebased series with base 2019=100, published by Labour Bureau, Ministry of Labour & Employment on July 18, 2025. 2. *: Comprises ploughing, sowing, harvesting, picking, horticulture workers, fishermen inland, fishermen costal, loggers and wood cutters, animal husbandry, packaging, general agriculture labourers, plant protection workers. 3. **: Comprises carpenter, blacksmith, mason, weavers, beedi makers, bamboo, cane basket weavers, handicraft workers, plumbers, electrician, construction workers, light motor vehicle & tractor drivers, sweeping/cleaning workers, and other non-agricultural labourers. Sources: NSO; Labour Bureau; and RBI staff estimates. In the organised sector, staff cost growth (y-o-y) managers’ index (PMI) reported an expansion in input edged up for manufacturing sector during Q4:2024-25 prices for August 2025. Movements in output prices and Q1:2025-26 following the slump in Q3:2024-25. In charged by manufacturing firms broadly mirrored the the services sector, staff cost growth remained muted trend in input prices (Chart II.26a). in Q1:2025-26 (Chart II.25). Operating expenses of services sector reflected In terms of assessment of cost conditions, in PMI services increased in August 2025 with prices manufacturing firms polled for the purchasing charged by services firms also moving in tandem. The 46 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 52-luJ Chart II.23: Farm and Non-farm Input Cost Inflation (Y-o-y, per cent) 6 4 2 0.5 0 0.0 -1.3 -2 -4 -6 -10 Overall WPI Industrial raw materials* Farm inputs$ Notes: 1. *: Comprises primary non-food articles, minerals, coal, aviation turbine fuel, high speed diesel, naphtha, bitumen, furnace oil, lube oil, petroleum coke, electricity, cotton yarn and paper and pulp from WPI. 2. $: Comprises high speed diesel, fodder, electricity, fertilizers, pesticides, and agricultural and forestry machinery from WPI. 3. WPI Electricity captures unit revenue data from selected power generators. Sources: Ministry of Commerce and Industry; and RBI staff estimates. 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA -8 Chart II.25: Staff Cost in Manufacturing and Services Sectors a. Manufacturing Sector b. Services Sector (Per cent) (Per cent) 14 5.9 6 12 10 11.0 5 8 6 5.4 4 4 2 3 0 -2 -4 2 -6 -5.2 -8 1 Base effect Staff cost growth (y-o-y) Base effect Staff cost growth (y-o-y) Quarterly momemtum Quarterly momemtum Staff cost/value of production (right scale) Staff cost/value of production (right scale) Note: Staff cost growth (y-o-y) is based on a common set of companies. Sources: Capitaline database; and RBI staff estimates. 22-12-4Q 32-22-1Q 32-22-2Q 32-22-3Q 32-22-4Q 42-32-1Q 42-32-2Q 42-32-3Q 42-32-4Q 52-42-1Q 52-42-2Q 52-42-3Q 52-42-4Q 62-52-1Q 30 40 25 35 20 26.6 30 15 9.7 25 10 20 5 4.1 15 0 -5 10 -4.1 -10 5 -15 0 22-12-4Q 32-22-1Q 32-22-2Q 32-22-3Q 32-22-4Q 42-32-1Q 42-32-2Q 42-32-3Q 42-32-4Q 52-42-1Q 52-42-2Q 52-42-3Q 52-42-4Q 62-52-1QChapter II Prices and Costs Chart II.26: PMI Input-Output Price Gap a. Manufacturing Sector b. Services Sector [Index (seasonally adjusted, 50=No change), [Index (seasonally adjusted, 50=No change), left scale; index gap, right scale] left scale; index gap, right scale] 75 5 70 4 65 3 60 2 55 54.4 1 52.7 50 0 45 -1 40 -2 35 -3 Output prices Input prices Output prices Input prices Input-output price gap (right scale) Sources: S&P Global; and RBI staff estimates. input-output price gap for both manufacturing and ease in manufacturing and infrastructure sectors services sector firms do not indicate any pent-up pass- during Q3:2025-26, but pick up in the services sector through (Chart II.26b). (Chart II.27a). During Q3:2025-26, input cost and On the assessment and outlook of cost conditions, selling price pressures are expected to moderate for as per the firms polled in the Reserve Bank’s enterprise the infrastructure sector whereas both are expected to surveys27, salary outgo pressures are expected to harden for the services sector (Chart II.27b and II.27c). 27 Industrial Outlook Survey; and Services and Infrastructure Outlook Survey. 4477 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA 75 5 70 4 65 3 60 2 55.5 55 1 55.3 50 0 45 -1 40 -2 35 -3 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA Input-output price gap (right scale) Chart II.27: Expectations of Cost and Price Conditions a. Salary Outgo b. Cost of Inputs c. Selling Prices (Net response, per cent) (Net response, per cent) (Net response, per cent) Note: ‘Net response’ is the difference between the percentage of respondents reporting an increase in prices and those reporting decrease. Sources: Reserve Bank’s Industrial Outlook Survey; Services & Infrastructure Outlook survey; and RBI staff estimates. noisnapxE noitcartnoC 90 80 70 60 50 50.8 40 46.2 30 29.9 20 10 0 -10 -20 Manufacturing firms Services firms Infrastructure firms 22-1202:4Q 32-2202:1Q 32-2202:2Q 32-2202:3Q 32-2202:4Q 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1Q 62-5202:2Q 62-5202:3Q 90 80 70 60 57.8 53.5 50 40 45.6 30 20 10 0 -10 -20 22-1202:4Q 32-2202:1Q 32-2202:2Q 32-2202:3Q 32-2202:4Q 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1Q 62-5202:2Q 62-5202:3Q 90 80 70 60 50 45.8 40 43.6 30 24.1 20 10 0 -10 -20 22-1202:4Q 32-2202:1Q 32-2202:2Q 32-2202:3Q 32-2202:4Q 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1Q 62-5202:2Q 62-5202:3QMonetary Policy Report October 2025 Margins 2025, aimed at simplifying tax rates and lowering The absolute retail price margins28 remained prices for the final consumer. A mapping of changes steady in case of select cereals (rice, wheat and atta), in GST rates to the CPI shows that about 11.4 per cent pulses and edible oils, during April-September 2025 of the CPI basket would be impacted by the recent (Chart II.28). The stable retail price margins of edible changes, with the magnitude varying significantly oils post import-tariff duty reduction in May 2025 across product groups (Table II.5). The overall impact indicate that there is no pent-up price transmission of GST changes on CPI inflation would be conditional post the duty reduction with domestic prices firming on the extent of the pass-through which is likely to up in both wholesale and retail markets. Retail margins remain partial on account of offsetting changes in decreased in TOP vegetables in September 2025 after input tax credit and compensation cess, as well as some increase seen during July-August 2025.29 various forms of price rigidities. GST Rationalisation Overall, the historical decomposition of inflation The Government has implemented GST rate using a VAR30 model indicates that the moderation in rationalisation measures effective September 22, inflation witnessed during Q4:2024-25 to Q2:2025-26 Chart II.28: Retail, Wholesale Prices, and Margins a. Cereals b. Pulses [Price, left scale; Margin, right scale [Price, left scale; Margin, right scale (₹ per kilogram)] (₹ per kilogram)] 45 6 42 40.8 39 36.3 5 36 33 4 30 27 3 24 21 2 18 15 1 Retail price Wholesale price Retail price Wholesale price Retail price margin (right scale) Retail price margin (right scale) c. Vegetables d. Edible Oils [Price, left scale; Margin, right scale [Price, left scale; Margin, right scale (₹ per kilogram)] (₹ per kilogram)] Retail price Wholesale price Retail price Wholesale price Retail price margin (right scale) Retail price margin (right scale) Sources: Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution; and RBI staff estimates. 28 Defined as the difference between retail and wholesale prices based on the data collected by DCA. 29 September month price margins are calculated based on daily wholesale and retail price data till September 24, 2025. 30 Historical decomposition estimates the contribution of each shock to the movements in inflation over the sample period (Q4:2010-11 to Q2:2025-26) based on a VAR with the following variables (represented as the vector Y ) – crude oil prices (US$ per barrel); exchange rate (INR per US$), asset price (BSE t Sensex), CPI; the output gap; rural wages; the policy repo rate; and money supply (M3). All variables other than policy repo rate are y-o-y growth rates. The VAR can be written in reduced form as: Y = c + A Y + e ; where e represents a vector of shocks. Using Wold decomposition, Y can be represented as t t–1 t t t a function of its deterministic trend and sum of all the shocks e. t 48 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA 50 12 40 10 30.5 30 23.8 8 20 6 10 4 0 2 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA 200 12 180 175.3 11 165.1 160 10 140 9 120 8 100 7 80 6 60 5 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guA 140 16 120 107.5 14 12 100 98.3 10 80 8 60 6 40 4 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 52-nuJ 52-guAChapter II Prices and Costs Table II.5: GST Slabs mapped to item-level CPI^ Major Items GST 1.0 Rate GST 2.0 Rate Difference CPI Weight (per cent) (per cent) (percentage points) (per cent) Primary food articles (Cereals, Pulses, Vegetables, Fresh Fruits, Raw Milk, etc.) 0 0 0 61.3 Gold and Silver 3 3 0 1.2 Clothing and Footwear (less than `1000), Fuel (LPG, kerosene), some household items 5 5 0 18.9 Electrical fittings, small electronic items, washing soap, private tuition fees, etc. 18 18 0 6.1 Coal 5 18 0* 0.04 Demerit goods like pan, tobacco, intoxicants 28 40 0$ 1.1 Stationery items like notebooks, exercise books, pencils, etc. 12 0 -12 0.4 Milk products, Dry fruits, Utensils, Medicines, Sugar, Clothing and Footwear 12 5 -7 4.6 (between `1000 and `2500), etc. FMCG items: biscuits, soaps, shampoo, shaving kits, etc. 18 5 -13 3.5 White goods like AC, refrigerator, etc. 28 18 -10 2.2 Packaged cooked meal 5 0 -5 0.7 Decreased (Weight in CPI) 11.4 No change (Weight in CPI) 88.6 Notes: 1. ^: Weights are adjusted for assumed proportion of pre-packaged and labelled price quotations collected by NSO for an item under CPI basket. 2. *: Coal attracted, prior to rate rationalization, 5% GST+ Compensation cess of Rs 400/ton. The GST Council has recommended to end compensation cess and hence the rate has been merged with GST. There is no additional tax burden. 3. $: For cigarettes, chewing tobacco products etc. (excluding bidi, where the GST rate was cut), the existing rates of GST and compensation cess will continue to apply, and the new rates will be implemented at a later date to be notified, based on discharging of entire loan and interest liabilities on account of compensation cess. Hence, for these goods, rates are taken as unchanged. Sources: Goods and Services Tax Council; NSO; and RBI staff estimates. Chart II.29: Decomposition of CPI Inflation* (Percentage points) 5 8 4 7 3 6 2 1 5 0 4 -1 3 -2 2 -3 -4 1 -5 0 Fuel price shock Exchange rate shock Policy rate shock Asset price shock Supply shock Output gap shock Wage shock Money supply shock Inflation (right scale, per cent) 4499 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1Q 62-5202:2Q was primarily on account of favourable supply shocks than anticipated moderation in food prices. The (Chart II.29). moderation in inflation has also turned out to be more generalised with core inflation remaining II.5 Conclusion largely rangebound despite pressure exerted by sharp Headline inflation declined significantly increases in gold prices. Going forward, the progress during FY2025-26 (April-August), driven by a faster of southwest monsoon, higher kharif crop sowing as well as record reservoir levels, which could help the rabi sowing are all pointing towards a benign food price scenario. Recent reduction in GST rates could further aid in keeping overall inflation low and below the target during 2025-26, on an average basis. CPI inflation, however, is likely to edge up, especially during Q4:2025-26, as unfavourable base effects kick in, and demand side stimulus from policy easing come into play. Although benign inflation conditions are expected to prevail in the near-term, uncertainties emanating from unexpected weather shocks as well as international * Deviation from deterministic trend. commodity prices continue to pose major risks to the Note: Estimated using a vector autoregression (see footnote 30 for details). Q2:2025-26 pertains to July-August 2025. inflation trajectory. Sources: NSO; RBI; Petroleum Planning & Analysis Cell (PPAC); BSE; Labour Bureau; and RBI staff estimates.OCTOBER 2025 Monetary Policy Report III. Demand and Output output, which may mitigate the adverse impact of US tariffs. The protracted geopolitical tensions, rising geoeconomic fragmentations and global financial Domestic economic activity remained buoyant in market volatility continue to pose downside risk to H1:2025-26, driven by strong private consumption and the growth outlook. robust investment. External demand continues to face headwinds from global trade uncertainties and US III.1 Aggregate Demand tariffs. Manufacturing activity gained strength, while Aggregate demand conditions improved further as the services sector sustained its momentum. Structural reflected in the growth of real gross domestic product reforms, including GST 2.0, are expected to support (GDP) at 7.8 per cent year-on-year (y-o-y) in Q1:2025- momentum in domestic demand and output. 26 as compared to 7.4 per cent in the previous quarter. Domestic economic activity exhibited resilience This was driven by buoyant private consumption, in H1:2025-26, with accelerated real GDP growth government consumption and fixed investment – in Q1. Aggregate demand continued to be strong, all three components posted growth of 7 per cent or underpinned by buoyant private consumption and above– while net exports acted as a drag on aggregate strengthening investment activity. Government demand (Table III.1 and Chart III.1). The momentum consumption also held up well. Net external demand, of GDP – quarter-on-quarter (q-o-q) seasonally adjusted however, remained weak and acted as a drag on annualised growth rate (SAAR) – was placed at 6.7 per aggregate demand. On the supply side, manufacturing cent (Chart III.1b). activity gained further steam, while the services GDP Projections versus Actual Outcomes sector held its momentum. Agricultural activity also expanded at a healthy pace. Going forward, the The actual growth for Q1:2025-26 turned out high US tariffs, unless resolved, could reduce India’s to be higher than projected in the Monetary Policy merchandise exports to the largest export destination, Report (MPR) of April 2025 (Chart III.2). This was adversely impacting net external demand. The recent mainly on account of a stronger than anticipated structural reforms, including the implementation of performance of private consumption and government GST 2.0, are expected to boost domestic demand and final consumption expenditure. Table III.1: Real GDP Growth (Y-o-y, per cent)^ Item 2023-24 2024-25 Weighted Contribution* 2024-25 2025-26 (FRE) (PE) 2023-24 2024-25 Q1 Q2 Q3 Q4 Q1 Private final consumption expenditure 5.6 7.2 3.2 4.0 8.3 6.4 8.1 6.0 7.0 Government final consumption 8.1 2.3 0.8 0.2 -0.3 4.3 9.3 -1.8 7.4 expenditure Gross fixed capital formation 8.8 7.1 3.0 2.4 6.7 6.7 5.2 9.4 7.8 Exports 2.2 6.3 0.5 1.4 8.3 3.0 10.8 3.9 6.3 Imports 13.8 -3.7 3.3 -0.9 -1.6 1.0 -2.1 -12.7 10.9 GDP at market prices 9.2 6.5 9.2 6.5 6.5 5.6 6.4 7.4 7.8 Note: *: Component-wise contributions to growth do not add up to GDP growth because change in stocks, valuables and discrepancies are not included. ^: Unless specified otherwise, all discussions on growth rates in this chapter are on year-on-year (y-o-y) basis. FRE: First revised estimates; PE: Provisional estimates. Sources: National Statistical Office (NSO); and RBI staff estimates. 50 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 Chart III.1: GDP Growth and its Constituents a. Weighted Contribution of the Components b. GDP Growth and Momentum to GDP Growth (Y-o-y growth in per cent) 16 (Percentage points) 18 12 12 7.8 7.8 8 6 6.7 4 0 0 -6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 -4 2022-23 2023-24 2024-25 2025 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 -26 PFCE GFCE 2022-23 2023-24 2024-25 2025 GFCF Net exports -26 GDP (y-o-y, per cent) y-o-y growth q-o-q SAAR Notes: PFCE: Private final consumption expenditure; GFCE: Government final consumption expenditure; GFCF: Gross fixed capital formation; SAAR – Seasonally adjusted annualised rate. Sources: NSO; and RBI staff estimates. III.1.1 Private Final Consumption Expenditure employment conditions are supporting discretionary spending and private consumption. Private final consumption expenditure – the mainstay of aggregate demand – rebounded and grew Latest high frequency indicators (HFIs) show some by 7.0 per cent (y-o-y), contributing 4.0 percentage signs of improvement in urban demand in Q2:2025-26 points to overall GDP growth in Q1:2025-26. The strong (Table III.2). The consumer durables output expanded growth in private consumption in Q1 indicates revival at a strong pace in July 2025, while the sales of fast- in the discretionary spending of households. The moving consumer goods in urban areas improved decline in interest rates, lower inflation and steady during July-August. Passenger vehicle sales posted positive growth in July 2025 but turned negative in Chart III.2: GDP Growth - Projection versus Actual August. Growth in bank credit to households (personal (Y-o-y growth in per cent) loans) remained robust during July-August, despite 8.0 7.8 moderating from the last year’s levels. Domestic air 6.5 passenger traffic contracted during July-August, partly 6.0 on account of monsoon rains. As per the latest round of the Reserve Bank’s 4.0 Consumer Confidence Survey, households are optimistic about their one-year-ahead economic 2.0 conditions, and the consumer confidence also recorded improvement in September 2025. Consumer expectations, shaped by the stance of monetary policy 0.0 Q1:2025-26 and the signals conveyed by key macroeconomic April 2025 MPR Projection Actual indicators, are also indicating improvement in private Sources: NSO; and RBI staff estimates. consumption (Box.III.1). RBI Bulletin October 2025 51OCTOBER 2025 Monetary Policy Report Table III.2: Indicators of Consumption (Y-o-y, per cent) Indicators 2023-24 2024-25 2025-26 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Jul Aug Urban demand Domestic air passenger traffic 19.1 23.0 9.1 5.2 5.6 7.3 11.4 12.0 5.3 -2.5 -0.5 Passenger vehicle sales 9.6 5.8 8.6 10.8 20.2 -1.3 5.1 3.6 -1.4 1.5# -9.0# IIP: Consumer durables -2.7 1.1 5.3 11.2 10.7 6.6 9.0 5.9 2.6 7.7 Personal loans 21.3 30.0 28.4 27.5 25.6 13.4 12.0 11.6 12.1 11.9 Vehicle loans 19.3 21.2 16.4 14.2 15.5 13.3 8.8 8.6 10.8 8.9 Credit card outstanding 37.6 31.4 32.6 25.6 23.3 18.0 15.6 10.6 7.2 5.6 Rural demand Tractor sales -1.9 -5.8 -4.9 -18.9 0.5 0.7 13.5 17.3 9.2 8.0 28.3 Motorcycle sales 13.8 -2.9 22.1 27.0 16.8 10.2 -1.9 -3.5 -9.2 4.7 4.3 IIP: Consumer non-durables 6.8 7.0 2.5 0.7 -0.2 -2.2 -1.6 -2.0 -1.5 0.5 Fertiliser sales -2.9 6.0 2.4 -5.3 2.4 -7.3 0.4 -9.6 -14.7 MGNREGA work demand 4.4 15.1 1.3 -8.3 -16.1 -16.6 1.7 6.5 1.3 -12.3 -26.1 FMCG sales Rural 5.7 9.1 8.3 8.4 8.5 8.2 Urban 1.9 4.0 2.4 4.1 3.9 4.3 All India 3.5 6.2 4.9 5.9 5.8 5.9 #: Doesn’t include Tata Motors. Sources: Directorate General of Civil Aviation (DGCA), Society of Indian Automobile Manufacturers (SIAM); NSO; RBI; Tractor and Mechanization Association (TMA); Ministry of Chemicals and Fertilisers (MoC&F); Ministery of Rural Development (MoRD); NielsenIQ’s Retail Audit Service; and RBI staff estimates. Box III.1: Consumer Confidence Channel: The Perception Pathway in Policy Transmission to Private Consumption Private consumption, being the main driver of growth downturns, can lead to reduced spending, reinforcing in the Indian economy, is tracked actively by analysts the slowdown through a negative feedback loop as well as policymakers. Though high frequency (Ilut & Saijo, 2020). Recognising the importance of indicators are generally used to monitor the emerging confidence channel, a mixed data sampling (MIDAS) trends in consumption, the qualitative assessment regression is estimated to examine the impact of through the consumer confidence channel is also macroeconomic conditions (GDP growth, government found to be of significance for monetary policy. expenditure, and policy interest rates) on the Current The Reserve Bank of India’s Consumer Confidence Confidence Index and the Future Expectations Index Survey serves as a barometer of public sentiment (Lahiri & Monokroussos, 2016). In the next step, regarding key economic dimensions such as income, the autoregressive distributed lags (ARDL) model is employment, inflation, and households’ spending. estimated, based on quarterly data spanning Q1:2011- It captures consumer perceptions of the prevailing 12 to Q4:2024-25, to investigate the influence of economic conditions through the Current Confidence Index and anticipated conditions over the short to consumer sentiment, captured through the Current medium term through the Future Expectations Index. Confidence Index and the Future Expectations Index, A fall in consumer confidence, especially during on actual private consumption. (Contd.) 52 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 The results suggest that macroeconomic conditions Table III.1.1: Relationship between Macro- (especially GDP growth and policy rate) impact Economic Variables, Consumer Confidence and consumer sentiment, which in turn is found to have Private Consumption a positive relationship with private consumption Explanatory Variables Dependent Variables (Table III.1.1). GDP growth influences both Current CCI FEI PFCE Confidence Index and Future Expectations Index, Intercept 3.01 -25.19* -0.02 underscoring its role as a key economic signal. Policy (23.78) (13.98) (0.10) rate changes also impact both the Current Confidence PFCE (Lag 1) 0.08 Index and the Future Expectations Index in the positive (0.16) direction, although the extent of impact varies across CCI 0.14 1.70*** (0.13) (0.33) lags, reflecting dynamic adjustment in consumers’ CCI (Lag 1) -1.38*** expectations. The findings of the ARDL model suggest (0.27) that the Current Confidence Index and lagged Future FEI (Lag 2) 0.38* (0.19) Expectations Index have a statistically significant GDP 1.20*** 0.77*** positive relationship with private consumption. The (0.36) (0.26) negative effect of the lagged Current Confidence Index GDP (Lag 1) 1.18** -0.16 may reflect adjustments based on past uncertainties. (0.43) (0.30) Overall, the results indicate the working of a feedback GDP (Lag 2) 0.92* -0.02 (0.45) (0.29) loop wherein macroeconomic conditions impact Govt expenditure 0.99 1.38** consumer sentiment, which in turn affects private (1.02) (0.61) consumption. Thus, consumer sentiments could WACR# (Lag 1) -0.28* -0.21*** provide valuable insights into the evolving trends in (0.16) (0.10) Residual standard error 8.64 5.08 0.69 private consumption that contribute significantly to Multiple R-squared 0.92 0.88 0.64 aggregate demand. Adjusted R-squared 0.81 0.70 0.56 References: F-statistic 8.12*** 4.82*** 7.43*** Notes: 1. Seasonal variables have been seasonally adjusted, and the Ilut, C., and Saijo, H. (2021). Learning, confidence, and analysis has been conducted using the difference of WACR business cycles. Journal of Monetary Economics, 117, and log differences of other variables. The bi-monthly survey results have been converted to a quarterly frequency by 354-376. aligning them with the reference periods of the corresponding survey rounds. Lahiri, K., Monokroussos, G., and Zhao, Y. (2016). 2. Figures in parenthesis denote corresponding standard errors. Forecasting consumption: The role of consumer 3. CCI: Current Confidence Index; FEI: Future Expectations confidence in real time with many predictors. Journal Index; WACR: Weighted Average Call Rate. # : Co-efficients for subsequent immediate lags are also significant. of Applied Econometrics, 31(7), 1254-1275. *** p<0.01, ** p<0.05, * p<0.1 Rural demand continues to remain resilient on dropped significantly in July-August, reflecting an the back of robust rabi and summer crops production, improvement in farm sector employment. The strong and a positive outlook for kharif output conditioned growth in fast-moving consumer goods sales in rural by the above-normal south-west monsoon. Tractor areas also attests to buoyant demand conditions sales remained upbeat during July-August 2025, (Table III.2). The above normal south-west monsoon and motorcycle sales witnessed a revival during this (SWM) rainfall, higher cumulative kharif sowing and period after contracting in preceding months. The improved reservoir level augur well for sustaining demand for work under the Mahatma Gandhi National the momentum in rural demand. Rural Employment Guarantee Act (MGNREGA) RBI Bulletin October 2025 53OCTOBER 2025 Monetary Policy Report Chart III.3: Employment Situation in India a. Monthly Periodic Labour Force Survey b. Net Payroll Additions in EPFO Records (Per cent) (Lakhs) 60 7 25 20 55 6 15 10 50 5 5 45 4 0 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Labour force participation rate Unemployment rate (right scale) Worker population ratio 2023 2024 2025 Sources: Ministry of Statistics and Programme Implementation (MoSPI); and Employees’ Provident Fund Organisation (EPFO). Employment conditions remained steady in 2025- strong growth during July-August 2025, sustaining 26. The labour force participation rate (LFPR) and the healthy momentum. Domestic production of capital worker population ratio (WPR) as per the monthly goods recorded modest growth in July after witnesing Periodic Labour Force Survey (PLFS) improved for strong growth in Q1. Import of capital goods grew both rural and urban areas. The unemployment rate sharply in July before contracting in the month of declined to 5.1 per cent in August 2025 (Chart III.3a). August (Table III.3). The Employees’ Provident Fund Organisation (EPFO) Capacity utilisation in the manufacturing sector1 payroll data also indicate strengthening of formal increased marginally to 74.1 per cent in Q1:2025-26 employment as average net payroll additions during from the same quarter last year. Seasonally adjusted April-July rose to 17.3 lakh (Chart III.3b). capacity utilisation at 75.8 per cent in Q1, increased III.1.2 Gross Fixed Capital Formation by 30 basis points from the previous quarter and was well above the long-period average of 73.9 per cent2 Gross fixed capital formation expanded at a strong (Chart III.4). Stretched capacity utilisation generally pace in Q1:2025-26, aided by robust government necessitates new capacity additions to keep pace with capex. The share of gross fixed capital formation underlying domestic demand. Funds raised for capex in GDP improved to 34.6 per cent in Q1 from 33.9 by private corporates during Q1 through the different per cent in the previous quarter. The congenial channels (Banks/Financial Institutions, External financial conditions, engendered by monetary policy Commercial Borrowings, Initial Public Offerings) easing, along with healthy twin balance sheets remained stable, despite heightened uncertainties. (banks and corporates) and rising capacity utilisation continue to support fixed investment. Among 1 Based on RBI’s survey of order books, inventories, and capacity coincident indicators of construction activity, steel utilisation. 2 Long term average is for the period Q1:2008-09 to Q1:2025-26 excluding consumption and cement production, exhibited Q1:2020-21. 54 RBI Bulletin October 2025 naJ beF raM rpA yaM nuJ luJ guA peS tcO voN ceD 21.0 5.1Monetary Policy Report OCTOBER 2025 Table III.3: Indicators of Investment Demand Chart III.4: Capacity Utilisation in Manufacturing (Y-o-y, per cent) (Per cent) 80 Indicators 2024-25 2025-26 Q1 Q2 Q3 Q4 Q1 Jul Aug 78 Import of capital 10.0 11.7 6.0 7.9 14.3 12.0 -1.3 goods 75.8 76 IIP: Capital goods 3.0 4.9 7.4 7.0 9.8 5.0 Finished steel 15.3 11.8 7.8 11.9 7.9 7.3 10.0 74 74.1 consumption 73.9 Cement 0.4 3.2 8.7 12.4 8.0 11.6 6.1 72 production Sources: Directorate General of Commercial Intelligence and Statistics 70 (DGCI&S); NSO; Joint Plant Committee; and Office of Economic Adviser. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2022-23 2023-24 2024-25 2025- 25 On the other hand, private capex, especially in CU CU (seasonally adjusted) Long-term average export-intensive sectors, faced headwinds from Source: RBI staff estimates. global trade uncertainty (Box III.2). The interest coverage ratio (ICR)3 of the listed threshold level of one, the elevated interest coverage private manufacturing companies improved in ratio of IT firms inched up further (Table III.4). This, Q1:2025-26, indicating strong debt servicing capacity. in conjunction with congenial financial conditions Within the services sector, while interest coverage and improving domestic demand, should encourage ratio of non-IT services remained stable above the firms to undertake new capacity creation. Box III.2: External Demand and Fixed Investment Dynamics: An Empirical Investigation with Firm-level Data Significant deleveraging of corporate balance sheets firms’ investment decisions. In this regard, Fabling took place post-COVID, owing to improved profitability and Sanderson (2013) emphasised that exports provide and easy financial conditions. Strengthening of stable cash flows and ease financial constraints, often balance sheets generally tends to have positive impact leading to firms’ increased investment in fixed assets. on corporates’ investment (Gupta et al., 2023; Wang In India too, it has been observed that investment et al., 2013). The healthy balance sheet of the banking and exports move in tandem, suggesting that export sector coupled with congenial financial conditions performance boosts investment (Chart III.2.1). have eased the financing constraints of corporates for In this backdrop, a fixed effects panel regression is investments. Notwithstanding all these supporting estimated, based on data spanning 2004 to 2024, to factors, the revival in corporate investment cycle examine the impact of exports on firms’ investment in is yet to become broad-based, as new investment is fixed assets. The change in firms’ investment in fixed witnessed only in a few select sectors. capital is taken as dependent variable. Apart from The extant literature underlines the importance of firms’ exports earnings, firm-level control variables foreign market access (exports) and uncertainty in (Contd.) 3 Interest coverage ratio is the ratio of earnings before interest and taxes (EBIT) to interest expenses and measures a company’s capacity to make interest payments on its debt. The minimum value for a viable ICR is 1. RBI Bulletin October 2025 55OCTOBER 2025 Monetary Policy Report 45 40 35 30 25 20 15 (interest coverage ratio) and aggregate merchandise III.2.1). Exporting firms’ investment is roughly 1 per exports are considered as explanatory variables. The cent more than that of non-exporting firms. Even after results suggest that export growth at both the firm level controlling for firm leverage, export-oriented firms and at the aggregate level has a statistically significant invest about 0.28 per cent higher than non-exporting positive impact on fixed investment growth (Table firms. Based on these results, it may be inferred that Table III.2.1: Relationship between Exports and elevated global economic uncertainty due to multiple Corporate Investment (2004-2024) shocks post COVID coupled with uneven export Variables I II III IV V VI performance during the last few years, may also be ICR (lag 1) 0.12*** contributing to a delayed revival in private corporate (0.005) investment cycle. Export Firm 0.95*** 0.28* (0.141) (0.146) References Taper tantrum -0.29*** (0.009) Fabling, R., & Sanderson, L. (2013). Exporting and Forex earnings 0.03*** 0.02*** 0.02*** 0.02*** firm performance: Market entry, investment and growth (0.001) (0.001) (0.001) (0.001) Exports 0.06*** 0.24*** expansion. Journal of International Economics, 89(2), growth (0.004) (0.008) 422-431. Constant 14.35*** 12.05*** 13.50*** 18.58*** 12.98*** 12.34*** (0.081) (0.099) (0.028) (0.399) (0.044) (0.053) Gupta, K., Kumar, S., & Gulati, S. (2023). Drivers of Observations 115,694 91,300 104,271 104,271 104,271 104,271 Corporate Investment in India: Assessing the Impact R-squared 0.000 0.006 0.008 0.058 0.011 0.026 of Monetary Policy and COVID. South Asia Economic Number of 14,655 14,655 14,655 14,655 Journal, 24(2), 216-251 firms Firm FE YES YES YES YES Wang, J., Gochoco-Bautista, M. S., & Sotocinal, N. R. Year FE YES NO NO (2013). Corporate investments in Asian emerging Robust standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1 markets: Financial conditions, financial development, Notes: 1. Export Firm is defined as firms with exports to sales ratio higher than 30 per cent. and financial constraints. Asian Development Bank 2. Investment is defined as ratio of the annual change in fixed asset with total fixed asset as at end of the financial year. Economics Working Paper Series, (346). 56 RBI Bulletin October 2025 28-1891 58-4891 88-7891 19-0991 49-3991 79-6991 00-9991 30-2002 60-5002 90-8002 21-1102 51-4102 81-7102 12-0202 42-3202 Chart III.2.1: Investment trends a. Gross Capital Formation b. Exports and Fixed Investment (Per cent of nominal GDP) [Annual growth (%) in Fixed investment (y - axis), Real exports (x - axis)] 20 15 10 y = 0.38x + 4.50 5 R² = 0.47 0 -5 -10 -10 010 20 30 40 Sources: Ministry of Statistics and Programme Implementation (MoSPI); and RBI staff estimates.Monetary Policy Report OCTOBER 2025 quality of expenditure. During April-July 2025, this Table III.4: Interest Coverage Ratio ratio remained close to corresponding level of last (Ratio) Industry 2023-24 2024-25 2025- year (Chart III.5b). This reflects the government’s 26 continued thrust on fiscal consolidation without Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 compromising the quality of expenditure. Continued Manufacturing 6.8 7.5 7.4 7.5 7.9 7.9 7.6 8.7 9.1 fiscal consolidation and improvement in the quality Services 1.6 1.4 1.8 1.7 1.8 1.7 2.1 2.1 2.1 (non-IT) of government expenditure, along with strong IT 44.5 43.2 41.2 44.1 42.9 45.6 40.9 44.0 44.3 macroeconomic fundamentals, have contributed to Note: Data for Q1:2025-26 are based on results of 3,079 listed non- India’s sovereign rating upgrade by S&P Global Ratings government non-financial companies. Source: RBI staff estimates. in August 2025- the first upgrade in 18 years. III.1.3 Government Consumption On the revenue receipts front, the central government’s gross tax revenue recorded a muted Government final consumption expenditure growth of 0.8 per cent during April-July 2025. Indirect grew by 7.4 per cent (y-o-y) during Q1:2025-26, as tax revenue rose by 6.7 per cent, buoyed by higher against a contraction in the preceding quarter (Table receipts from goods and services tax and union excise III.1). Revenue expenditure of the central government duties. Direct tax collections, on the other hand, (excluding interest payments and major subsidies) recorded double-digit growth during April-July 2025. recorded a decline of 4.0 per cent, mainly due to This marks a significant turnaround from a modest contraction in personal income tax collections (Table increase in Q4:2024-25 and a contraction in the III.5). Gross goods and services tax collections (Centre corresponding period of the previous year. Capital plus States) expanded by 9.9 per cent during April- expenditure registered a high growth of 32.8 per August 2025, underscoring the sustained momentum cent in April-July (Chart III.5a). On an annual basis, in economic activity (Chart III.6). The central the central government’s revenue expenditure to government has recently undertaken a detailed capital outlay (RECO) ratio has been moderating since overhaul of the GST framework, encompassing three 2020-21, indicating sustained improvement in the pillars – structural reforms, rate rationalisation Chart III.5: Centre’s Expenditure: April - July a. Expenditure Growth b. Quality of Expenditure - Revenue Expenditure (Y-o-y growth in per cent) to Capital Outlay (RECO) 70 (Ratio) 60 50 40 30 20 10 0 -10 -20 Sources: Controller General of Accounts (CGA); and RBI staff estimates. RBI Bulletin October 2025 57 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 42-3202 52-4202 62-5202 16 14 12 10 8 6 4 2 0 Revenue Expenditure excluding interest payments and major subsidies Capital Expenditure 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 42-3202 52-4202 62-5202 32.8 12.1 4.9OCTOBER 2025 Monetary Policy Report Table III.5: Central Government’s Tax Collections Item ₹ thousand crore Per cent BE Actuals Per cent to BE Growth Rate 2023-24 2024-25 Apr-Jul Apr-Jul Apr-Jul Apr-Jul Apr-Jul Apr-Jul 2024 2025 2024 2025 2024 2025 A. Direct taxes 2,207 2,520 596 572 27.0 22.7 35.9 -4.0 Of which 1. Corporation tax 1,020 1,082 185 199 18.1 18.4 4.8 7.6 2. Income tax 1,150 1,360 394 355 34.3 26.1 53.4 -9.9 B. Indirect taxes 1,633 1,750 488 521 29.9 29.8 7.1 6.7 Of which 1. Total GST 1,067 1,183 341 375 32.0 31.7 9.5 9.8 2. Custom duties 238 240 68 61 28.4 25.2 3.8 -10.4 3. Union excise duties 319 317 77 84 24.1 26.5 0.8 9.3 C. Gross tax revenue 3,840 4,270 1084 1093 28.2 25.6 21.3 0.8 D. Assignment to States/UTs 1,247 1,422 367 429 29.4 30.1 18.5 16.9 E. Net tax revenue 2,583 2,837 715 662 27.7 23.3 22.8 -7.5 Note: BE: Budget Estimates. Sources: Union Budget Documents; and Controller General of Accounts (CGA). and ease of living. The GST rate structure has been 2025, mainly due to the large surplus transfer of ₹2.69 converted mainly into two slabs of 5 per cent and 18 lakh crore by the Reserve Bank of India in May 2025 per cent with a special 40 per cent rate for luxury and (Chart III.7). Centre’s gross fiscal deficit stood at 29.9 sin goods.4 per cent of its full year budget estimates (BE) during Non-tax revenue of the central government April-July 2025, higher than 17.2 per cent recorded in posted a high growth of 33.7 per cent during April-July the same period last year. Chart III.6: GST Collections (Centre plus States) Chart III.7: Centre’s Non-tax Revenue: April-July (₹ thousand crore) (₹ thousand crore) 250 450 225 400 200 186 350 98 175 300 150 250 125 200 100 150 294 75 50 100 25 50 0 0 12 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2022-23 2023-2024 2024-25 2025-26 2023-24 2024-25 2025-26 Interest receipts Dividends and profits Others Sources: Press information bureau (PIB); and GST website. Source: Controller General of Accounts (CGA). 4 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2156708 58 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 Table III.6: State Government Finances - Chart III.8: States’ Capital Outlay Key Deficit Indicators (Ratio, left scale; per cent of GDP, right scale) 7 4 (Per cent to GDP) 2023-24 2024-25 (PA) 2025-26 (BE) 6 3.0 Revenue deficit 0.3 0.6 0.2 3 5 4.9 Gross fiscal deficit 2.9 3.3 3.3 4 Primary deficit 1.2 1.7 1.5 2 Notes: 1. Data pertain to 31 States/UTs. 3 2. PA: Provisional Accounts; BE: Budget Estimates. Sources: Budget Documents of State/UTs; and Comptroller and Auditor 2 1 General (CAG) of India. 1 The consolidated gross fiscal deficit of State governments and Union Territories is budgeted 0 0 2022-23 2023-24 2024-25 (PA) 2025-26 (BE) at 3.3 per cent of GDP for 2025–26, same as in Capital outlay (right scale) the provisional estimates of 2024-25 (Table III.6). Revenue Expenditure to Captial Outlay Ratio Notes: 1. Data pertain to 31 States/UTs. State governments continue to prioritise capital 2. PA: Provisional Accounts; BE: Budget Estimates. Sources: Budget Documents of States/UTs; and CAG. expenditure, as evidenced by an improvement in the Revenue Expenditure to Capital Outlay (RECO) ratio, a proportion of their budget estimates, were higher which moderated to 4.9 in 2025-26 (BE) from 6.2 in compared to the corresponding period of last year, 2022-2023 (Chart III.8). The states’ capital expenditure primarily due to deceleration in revenue receipts is also supported by the central government through growth (Chart III.9a). The slowdown in receipts was the ‘Scheme for Special Assistance to States for Capital led by moderation in the growth of state goods and Investment’, under which ₹1.5 lakh crore has been service tax and sales tax/Value Added Tax (VAT) allocated for 2025-26. collections, even as state excise duties and stamp As per the available data for April-July 2025, duties and registration fees remained robust. Non- the key deficit indicators of state governments, as tax revenues increased at a slower pace relative to the Chart III.9: States’ Key Fiscal Performance Indicators: April-July a. Deficit Indicators b. Revenue and Expenditure (As per cent of budget estimates) (Y-o-y growth in per cent) 90 20 81.4 15 75 11.5 9.8 10 60 5.5 5 45 0 30 22.7 18.9 -5 15 -10 0 -15 Revenue deficit Gross fiscal deficit Primary deficit Revenue receipts Revenue expenditure Capital expenditure 2024-25 2025-26 2024-25 over 2023-24 2025-26 over 2024-25 Note: Data pertain to 24 States/UTs. Source: CAG. RBI Bulletin October 2025 59OCTOBER 2025 Monetary Policy Report previous year and grants from the central government Chart III.10: Merchandise Trade contracted further. On the expenditure front, revenue (Y-o-y growth in per cent, left scale; US$ billion, right scale) expenditure growth remained robust and capital 30 30 expenditure recorded a sharp upturn, aided partly by 20 20 the low base (Chart III.9b). 10 10 In the Union Budget for 2025-26, gross and net market borrowings through dated securities were 0 0 provided at ₹14.8 lakh crore and ₹11.5 lakh crore, -10 -10 respectively. During the H1:2025-26 (up to September -20 -20 26, 2025), gross market borrowings raised by the centre stood at ₹7.95 lakh crore, constituting 53.6 per -30 -30 cent of the annual budgeted amount (Table III.7). The -40 -40 weighted average cost of the issuances at 6.6 per cent was lower than 7.0 per cent in 2024-25. The weighted average maturity of the issuances declined to 19.6 years from 20.7 years in the previous fiscal. During Source: DGCI&S. H2:2025-26, the centre is expected to raise ₹6.8 lakh III.10). Services exports maintained buoyancy with crore through dated securities. States mobilised ₹4.7 double digit growth during April-July 2025. According lakh crore through gross market borrowings during H1 to provisional estimates released by the National (up to September 26, 2025), as against the indicative Statistical Office (NSO), real exports and imports of calendar amount of ₹5.6 lakh crore. In order to goods and services grew by 6.3 per cent and 10.9 per bridge temporary mismatches between receipts and cent, respectively, in Q1:2025–26 (Table III.1). expenditures, the Ways and Means Advances (WMA) limit for the central government was fixed at ₹1.5 lakh The increase in merchandise exports during crore for H1:2025-26 and has been revised to ₹50,000 H1:2025-26 (April-August) was primarily driven by crore for H2. strong performances in electronic goods, engineering III.1.4 External Demand goods, pharmaceuticals, marine products, and readymade garments. On the other hand, petroleum Amidst persisting global trade uncertainty, India’s products, iron ore, oil meals, cotton yarn, fabrics, merchandise exports exhibited uneven performance. made ups, and handloom products dragged down During April-August 2025, merchandise exports (in US dollar terms) registered an expansion of 2.5 per the overall export growth. Exports of petroleum, oil, cent, while merchandise imports rose by 2.1 per cent. and lubricants (POL) declined by 19.4 per cent y-o-y, The merchandise trade deficit during April-August amounting to US$ 26.1 billion during April-August 2025 widened marginally to US$122.4 billion from 2025. In contrast, non-POL, non-gems and jewellery US$120.5 billion in the same period last year (Chart exports posted a robust growth of 7.8 per cent, 60 RBI Bulletin October 2025 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 6.7 -10.1 -26.5 Trade balance (right scale) Exports Imports Non-oil non-gold imports Non-oil exports Table III.7: Government Market Borrowings (₹ crore) 2024-25 2025-26 (till September 26, 2025) Centre States Total Centre States Total Net borrowings 11,62,879 7,53,345 19,16,224 5,88,299 3,21,992 9,10,291 Gross borrowings 14,00,697 10,73,310 24,74,007 7,95,000 4,66,692 12,61,692 Sources: Government of India (GoI); and RBI staff estimates.Monetary Policy Report OCTOBER 2025 Chart III.11: Merchandise Exports a. Exports Growth - Relative Contribution b. Major Drivers of Exports in 2025-26 (April - August) (Percentage points, left scale; per cent, right scale) Relative Contribution (Percentage points) Electronic goods (40.7) Engineering goods (5.8) Drugs and pharmaceuticals (7.3) Marine products (16) RMG of all textiles (5.8) Cashew (-6.3) Cotton yarn/fabs./made-ups, handloom products etc. (-0.6) Oil meals (-17.8) Iron ore (-42.6) Petroleum products (-19.4) Non-POL exports POL exports Merchandise exports (per cent) World trade (right scale) -6 -4 -2 0 2 4 Notes: 1. World trade data is available up to June 2025. 2. Figures in parentheses in chart b are y-o-y percent change in exports of the commodity during the period. Sources: DGCI&S; CPB Netherlands; and RBI staff estimates. reaching US$ 146.7 billion during the same period transport equipment, pulses, and pearls, precious and (Chart III.11). semi-precious stones declined, dampening overall growth in imports. Petroleum, oil, and lubricants The growth in merchandise imports during (POL) imports contracted marginally by 0.1 per cent to H1:2025-26 (April-August) was primarily driven by imports of electronic goods, chemical materials US$ 78.1 billion during this period. On the contrary, and products, machinery (both electrical and non- non-POL, non-gold imports saw a robust expansion electrical), fertilisers, and non-ferrous metals. On the of 7.1 per cent, reaching US$ 211.5 billion, indicating other hand, imports of gold, coal, coke and briquettes, strong domestic demand (Chart III.12). RBI Bulletin October 2025 61 5 poT 5 mottoB 30 6 25 5 20 4 15 3 10 2 5 1 0 0 -5 -10 -1 -15 -2 -20 -3 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q guA-luJ 10.3 2022-23 2023-24 2024-25 2025-26 Chart III.12: Merchandise Imports a. Imports Growth - Relative Contribution b. Major Drivers of Imports in 2025-26 (April - August) (Percentage points) Relative Contribution 50 (Percentage points) 40 30 20 10 0 -10 -20 Note: Figures in parentheses in chart b are y-o-y percent change in imports of the commodity during the period. Sources: DGCI&S; and RBI staff estimates. 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q guA-luJ Electronic goods (17.1) Chemical material and products (82.2) Machinery, electrical and non-electrical (14.6) Fertilisers, crude and manufactured (53.0) Non-ferrous metals (9.3) Pearls, precious and semi-precious stones (-2.2) Pulses (-52.3) Transport equipment (-9.8) Coal, coke and briquettes, 2022-23 2023-24 2024-25 2025-26 etc. (-19.5) Gold (-30.7) POL imports Gold imports Non-POL non-gold imports Merchandise imports (per cent) 5 poT 5 mottoB -1.4 -3 -2 -1 0 1 2 3OCTOBER 2025 Monetary Policy Report India’s services exports remained buoyant On the financial account, gross inward foreign during April-July 2025, registering a robust growth of direct investment (FDI) was resilient in 2024-25, 10.1 per cent, supported by sustained global demand expanding by 13.1 per cent to US$ 80.6 billion. On a for Indian services (Chart III.13). The expansion was net basis, FDI inflows moderated significantly to US$ primarily driven by strong performance in software 1.0 billion, largely due to elevated repatriations and outward FDI. Global investment sentiment has also and business services. Reflecting this resilience, weakened, as evidenced by a contraction in global FDI India retained its position among the top five flows5 for the second consecutive year in 2024. During service-exporting nations in terms of export growth April-July 2025, gross FDI inflows remained strong in Q1:2025-26. Services imports growth moderated at US$ 37.7 billion, underscoring India’s continued to 1.5 per cent in Q1:2025-26 but accelerated to 8.5 appeal as a preferred investment destination. Net per cent in July. FDI inflows at US$ 10.8 billion during this period On a balance of payments basis, India’s current was also higher as compared to US$ 3.5 billion a year account deficit (CAD) stood at 0.2 per cent of GDP ago, primarily on account of a rise in grows inflows in Q1:2025-26, as against 0.9 per cent in Q1:2024- and a moderation in FDI repatriation. Singapore, the 25. This improvement in CAD was underpinned United States, Mauritius, the United Arab Emirates by robust services exports and strong inflow of and the Netherlands emerged as the top sources of remittances that significantly offset the high FDI in April-July 2025, collectively accounting for 76.0 merchandise trade deficit (Chart III.14). Amidst per cent of total inflows. Manufacturing, computer heightened global uncertainty, India continues to services, business services, communication services, receive robust private remittances (US$ 35.3 billion and electricity generation and distribution attracted during Q1:2025-26) and remain the largest recipient the bulk of FDI equity inflows, comprising 74.2 per of private remittances in the world. cent of the total. Chart III.13: Services Trade Chart III.14: Components of (Y-o-y growth in per cent) Current Account Deficit 50 (In US$ billion ) 100 40 80 60 30 40 20 20 0 -2.4 -20 10.3 10 -40 8.5 -60 0 -80 -100 -10 -120 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2* Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2023-24 2024-25 2025-26 2022-23 2023-24 2024-25 2025-26 Exports Imports Goods Services Income Transfers Total current account deficit Note: * Data is for July 2025 Source: RBI. Source: RBI. 5 Excluding financial flows from European conduit economies with elevated volatility. 62 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 Table III.8: Net Foreign Direct and Portfolio Investment (US$ billion) 2023-24 2024-25 2025-26 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Net FDI 4.7 -0.8 4.0 2.3 6.2 -2.8 -2.8 0.4 5.7 5.0# Net FPI 16.1 5.3 11.7 11.6 0.9 19.8 -11.4 -6.0 2.5 -5.5* Notes: #: Data is for July 2025. *: Net FPI data for Q1:2025-26 are based on balance of payments (BoP) statistics of RBI, while data for Q2:2025-26 is sourced from daily data, published by NSDL; and data is up to September 26 Sources: National Securities Depository Limited (NSDL); and RBI. Persistent geopolitical tensions, rise in global III.2 Aggregate Supply trade barriers, heightened policy uncertainty, and Aggregate supply – measured by real gross elevated U.S. bond yields have collectively dampened value added at basic prices – expanded by 7.6 per foreign investors sentiment towards emerging market cent in Q1:2025-26 (6.8 per cent in the preceding economies, especially in equity inflows in recent quarter) – marking a six-quarter high supported by a years. Reflecting this sentiment, foreign portfolio recovery in manufacturing and buoyancy in services. investment in India recorded a net outflow of US$ Manufacturing and all four major subsectors of services 3.0 billion during H1:2025-26 (up to September 26), recorded strong growth and cumulatively contributed mainly owing to outflows in the equity segment. around 94.3 per cent to total gross value added (Table Notably, FPI flows had turned positive in Q1:2025-26 III.9). The seasonally adjusted momentum of gross after two consecutive quarters of outflows, indicating value added moderated in Q1 from the previous quarter (Chart III.15b). a brief recovery in investor confidence (Table III.8). This momentum reversed in Q2 (up to September 26), III.2.1 Agriculture as global risk aversion intensified, compounded by Agriculture sector prospects remain favourable, U.S. tariffs. supported by above normal monsoons, adequate External commercial borrowing inflows decreased reservoir levels, and supportive policy interventions. to US$ 3.7 billion during April-August 2025 from Real gross value added in the agriculture, forestry, and US$ 4.9 billion a year earlier. Of these borrowings, fishing sector expanded by 3.7 per cent in Q1:2025-26, lower than 5.4 per cent in Q4:2024-25 but higher than approximately 60.6 per cent were hedged, reflecting a 1.5 per cent in the same period of last year. Southwest prudent approach in the wake of high global financial monsoon commenced eight days ahead of its normal volatility. Net accretions to non-resident deposits schedule,6 and gained significant momentum, covering during April-July 2025 moderated to US$ 4.7 billion the entire country by June 29. As of September 26, from US$ 5.8 billion in the same period last year. 2025, the cumulative rainfall was 7 per cent above This decline was driven mainly by reduced inflows the Long Period Average (Chart III.16a). Regionally, in Foreign Currency Non-Resident Bank [FCNR(B)] rainfall exceeded the Long Period Average across all deposits. As of September 19, 2025, India’s foreign regions, except in East and Northeast India. exchange reserves stood at US$ 702.6 billion, sufficient Kharif sowing recorded an increase of 0.6 per to cover 11.5 months of annualised merchandise cent as on September 26, 2025 over the last year, on imports (on a balance of payments basis) or 95.4 per the back of good progress of southwest monsoon and cent of the country’s outstanding external debt as of end-March 2025. 6 https://internal.imd.gov.in/press_release/20250524_pr_3998.pdf RBI Bulletin October 2025 63OCTOBER 2025 Monetary Policy Report Table III.9: Real Gross Value Added Growth (Y-o-y, per cent) Sector 2023-24 2024-25 Weighted 2023-24 2024-25 2025-26 Contribution (FRE) (PE) 2022-23 2023-24 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Agriculture, forestry and fishing 2.7 4.6 0.4 0.7 5.7 3.7 1.5 0.9 1.5 4.1 6.6 5.4 3.7 Industry 11.0 4.5 2.4 1.0 6.6 15.3 12.6 9.9 7.8 2.1 3.5 4.7 5.8 Mining and quarrying 3.2 2.7 0.1 -0.2 4.1 4.1 4.7 0.8 6.6 -0.4 1.3 2.5 -3.1 Manufacturing 12.3 4.5 2.1 5.4 7.3 17.0 14.0 11.3 7.6 2.2 3.6 4.8 7.7 Electricity, gas, water supply and 8.6 5.9 0.2 -0.5 4.1 11.7 10.1 8.8 10.2 3.0 5.1 5.4 0.5 other utilities Services 9.2 7.5 5.8 4.8 12.1 8.3 8.5 8.0 7.2 7.4 7.5 7.9 9.0 Construction 10.4 9.4 0.9 8.7 9.2 14.6 10.0 8.7 10.1 8.4 7.9 10.8 7.6 Trade, hotels, transport, 7.5 6.1 1.4 -7.3 11.0 5.4 8.0 6.2 5.4 6.1 6.7 6.0 8.6 communication Financial, real estate and 10.3 7.2 2.4 -1.3 15.0 8.3 8.4 9.0 6.6 7.2 7.1 7.8 9.5 professional services Public administration, defence 8.8 8.9 1.1 0.8 9.3 8.9 8.4 8.7 9.0 8.9 8.9 8.7 9.8 and other services GVA at basic prices 8.6 6.4 8.6 6.4 9.9 9.2 8.0 7.3 6.5 5.8 6.5 6.8 7.6 Note: FRE: First revised estimates; PE: Provisional estimates. Sources: NSO; and RBI staff estimates. also exceeding season’s normal sown area. The rise in September 26, 2025, the production-weighted rainfall kharif acreage was primarily led by rice, maize, urad index (PRN) stood at 110 per cent, indicating relatively and sugarcane (Chart III.16b). As of September 25, 2025, higher rainfall in major foodgrain producing states reservoir levels stood at 90 per cent of total capacity, (Chart III.16d). Adequate soil moisture conditions exceeding the levels recorded a year ago as well as coupled with healthy reservoir storage are expected to the decadal average (Chart III.16c). Furthermore, as of boost the Rabi prospects. Chart III.15: Gross Value Added Growth and its Constituents a. Weighted Contribution of the Components b. GVA Growth and Momentum to GVA Growth (Per cent) (Percentage points) 16 12 12 10 8 7.6 7.6 8 6 6.9 4 4 2 0 0 -2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 -4 2023-24 2024-25 2025-26 -8 Public administration, defence and other services Financial, real estate & professional services -12 Trade, hotels, transport, communications Construction Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Electricity, gas and water supply Manufacturing 2022-23 2023-24 2024-25 2025 -26 Mining & Quarrying Agriculture GVA (y-o-y, per cent) y-o-y q-o-q SAAR Note: SAAR – Seasonally adjusted annualised rate. Sources: NSO; and RBI staff estimates. 64 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 Chart III.16: Progress of Rainfall, Reservoir Level and Kharif Sowing a. Cumulative Weekly Progress of Southwest b. Kharif Sown Area (as on September 26) Monsoon Rainfall$ (Lakh hectare, left scale; per cent, right scale) (Deviation from LPA in per cent) 30 7.0 10 -10 -30 -50 -70 Normal (Full Season)* 2024-25 2025-26 2023 2024 2025 Y-o-y growth (right scale) c. Reservoir level (September 25, 2025) d. Production-weighted Rainfall Index (PRN) (Per cent of live capacity at FRL) (June 1 - September 26) 120 (Index in per cent) 100 8790 120 107 110 80 77 100 80 60 60 40 40 20 20 0 0 Northern Eastern Western Central Southern All India 2020 2021 2022 2023 2024 2025 Average of last 10 years 2024 2025 IMD Index PRN Notes: *Normal area is the average of 5 years - 2019-20 to 2023-24. $Rainfall for 2025 is till September 26; FRL: Full Reservoir Level; PRN: Production-weighted Rainfall Index Sources: India Meteorological Department (IMD); Central Water Commission (CWC); Ministry of Agriculture and Farmers' Welfare (MoAFW); and RBI staff estimates. According to the third advance estimates of to 4.7 per cent in the previous quarter (7.8 per cent crops production for 2024-25, total foodgrain output a year ago). This was primarily driven by a rebound increased by 6.5 per cent to 3,540 lakh tonnes. in manufacturing activity with improving profit Except for sugarcane, cotton, and jute and mesta, all margins due to low input costs. Mining and quarrying major crops have recorded an increase in production contracted, while electricity, gas, water supply, and (Table III.10). other utility services increased marginally during Q1 The Government announced Minimum Support (Chart III.17). Prices for kharif crops for the 2025-26 marketing Index of industrial production (IIP) expanded season, increasing in the range of 1.0-13.9 per cent.7 by 2.0 per cent during April-July 2025 (Table III.11). The relative changes in Minimum Support Price are As alluded to earlier, the expansion in industrial expected to promote crop diversification, address production was mainly driven by higher growth demand-supply imbalances, and foster sustainable in manufacturing output, which registered a six- agricultural practices. month high in July. Mining and quarrying output III.2.2 Industry contracted during April-July 2025, partly owing to Gross value added of the industrial sector monsoon-related disruptions. Electricity generation expanded by 5.8 per cent in Q1:2025-26, as compared remained muted, due to lower than usual summer 7 https://desagri.gov.in/wp-content/uploads/2025/06/MSP-Notification-KMS-2025-26-English.pdf RBI Bulletin October 2025 65 1 keeW 2 keeW 3 keeW 4 keeW 1 keeW 2 keeW 3 keeW 4 keeW 1 keeW 2 keeW 3 keeW 4 keeW 5 keeW 1 keeW 2 keeW 3 keeW 4 keeW 500 10 400 6.6 6 300 3.2 200 1.4 0.8 -2.6 2 -2 100 0 -5.2 -6 June July August September eciR sesluP slaerec esraoC sdeesliO nottoC enacraguSOCTOBER 2025 Monetary Policy Report Table III.10: Agricultural Production in 2024-25 (Lakh tonnes) Crop 2023-24 2024-25 Variation in 2024-25 (Per cent) Final SAE TAE Over Final 2023-24 Over SAE 2024-25* Foodgrains 3323.0 3309.2 3539.6 6.5 1.3 Kharif 1557.7 1663.9 1680.7 7.9 1.0 Rabi 1600.1 1645.3 1672.2 4.5 1.6 Summer 165.2 - 186.8 13.0 - Rice 1378.3 1364.4 1490.7 8.2 0.8 Wheat 1132.9 1154.3 1175.1 3.7 1.8 Coarse cereals 569.4 560.3 621.4 9.1 2.2 Pulses 242.5 230.2 252.4 4.1 -0.2 Oilseeds 396.7 416.7 426.1 7.4 -0.7 Sugarcane 4531.6 4350.8 4501.2 -0.7 3.5 Cotton # 325.2 294.3 306.9 -5.6 4.3 Jute & Mesta ## 96.9 86.2 87.5 -9.8 1.4 Notes: *: SAE covers production of Kharif and Rabi crops only. Growth is calculated accordingly. #: Lakh bales of 170 kgs each; ##: Lakh bales of 180 kgs each. SAE: Second Advance Estimates. TAE: Third Advance Estimates. Sources: MoAFW; and GoI. temperature. Within manufacturing, production of goods and consumer non-durable goods contracted basic metal electrical equipment, motor vehicles, during this period. trailers and semi-trailers, machinery and equipment, Gross value added of electricity, gas, water supply, and fabricated metal products were the growth and other utility services grew modestly in Q1:2025- drivers, while chemicals, beverages, printing, paper, 26, compared to a double-digit growth last year, mainly leather, and other manufacturing products acted as due to a decline in electricity generation. Conventional a drag. In terms of use-based classification, capital, infrastructure, intermediate, and consumer durables power generation declined during April-August 2025, rose during April-July. On the other hand, primary reflecting both reduced demand in the face of subdued Chart III.17: Industrial GVA Growth a. Weighted Contribution to Industrial GVA Growth b. Manufacturing Sector Profitability (Percentage points) (Y-o-y growth in per cent) 16 60 12 45 8 30 5.8 15.0 4 15 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2023-24 2024-25 2025-26 -15 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Electricity, gas, water supply and other utility services 2022-23 2023-24 2024-25 2025 Manufacturing -26 Mining and quarrying Cost of raw materials Staff cost Interest expenses Industry (y-o-y) Depreciation Profit before tax Note: Data for Q1:2025-26 in chart b are based on results of 1,736 listed private manufacturing companies. Sources: Capitaline and RBI staff calculations. 66 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 Table III.11: Industrial Sector y-o-y growth (Y-o-y, Per cent) Indicators 2024-25 2025-26 Q1 Q2 Q3 Q4 Q1 Jul Aug Sep 1 PMI: Manufacturing (>50 indicates growth over 58.2 57.4 56.8 57.4 58.1 59.1 59.3 58.5* previous month) 2 Index of Industrial Production (IIP) 5.5 2.7 4.1 4.0 2.0 3.5 3 IIP: Manufacturing 4.3 3.3 4.5 4.2 3.3 5.4 4 IIP: Primary goods 6.9 1.6 3.0 4.1 -1.4 -1.7 5 IIP: Capital goods 3.0 4.9 7.4 7.0 9.8 5.0 6 IIP: Intermediate goods 3.5 4.8 5.3 3.4 5.0 5.8 7 IIP: Infrastructure and construction goods 8.1 3.9 7.0 8.1 6.0 11.9 8 IIP: Consumer durables 10.7 6.6 9.0 5.9 2.6 7.7 9 IIP: Consumer non-durables -0.2 -2.2 -1.6 -2.0 -1.5 0.5 10 Eight Core Industries (ECI) 6.3 2.4 4.9 4.3 1.5 3.7 6.3 11 ECI: Steel 8.4 4.3 7.8 6.8 7.2 16.6 14.2 12 ECI: Cement 0.4 3.2 8.7 12.4 8.0 11.6 6.1 13 Electricity demand 11.8 12.6 12.8 11.5 8.5 2.6 3.8 Production of Automobiles 14 Passenger vehicles 6.2 -0.5 3.3 6.4 4.9 0.1# -4.1# 15 Two wheelers 19.6 12.5 8.0 5.8 0.7 12.3 10.0 16 Three wheelers 9.5 6.3 -2.6 9.5 9.8 24.0 15.8 17 Tractors 1.0 3.2 12.1 11.7 12.7 11.5 9.4 Notes: #: Doesn’t include Tata Motors; and * : Flash PMI release. Sources: CMIE; CEIC; HSBC, S&P Global; Office of Economic Advisor; NSO; SIAM; TMA; and RBI staff estimates. summer and strong expansion in renewable energy electricity demand declined across all regions in Q1, sources. Given India’s continued thrust on greener with the sharpest drop in the northern region, as the energy, renewable energy sources expanded by 24.8 early monsoon kept power demand low. Demand in per cent during April-August, accounting for about 18 all the regions, except the northern region, picked up per cent of total electricity generation. Region-wise, during July-August (Table III.12). Table III.12: Electricity Generation and Consumption (Y-o-y, per cent) Indicators 2023-24 2024-25 2025-26 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Jul Aug Electricity Generation Thermal 2.1 14.7 14.3 10.1 12.0 -1.4 0.0 0.4 -8.1 -4.7 0.4 Nuclear -6.4 16.7 10.0 -2.2 28.3 18.4 11.4 16.9 11.3 -5.5 -25.2 Hydro -10.0 -13.4 -30.7 -20.2 1.3 6.2 28.3 19.8 13.4 23.4 9.0 Renewables 8.1 21.9 7.0 5.6 7.0 7.3 17.2 22.8 24.8 26.4 22.7 Electricity Consumption Northern region -8.9 8.4 6.0 8.3 22.0 3.1 9.5 1.6 -3.0 -5.4 1.5 Western region 3.5 20.8 7.7 7.1 5.5 -6.7 0.4 4.4 -0.3 7.6 9.3 Southern region 10.7 16.3 18.2 9.3 3.3 0.8 -2.3 3.1 -1.3 9.5 -0.9 Eastern region 4.9 6.6 9.2 7.9 9.8 0.6 3.9 3.9 -1.7 2.0 7.3 All-India 1.5 13.4 9.9 8.1 10.2 -0.7 2.6 3.2 -1.5 2.6 3.8 Sources: Central Electricity Authority (CEA); and Power System Operation Corporation Limited (POSOCO). RBI Bulletin October 2025 67OCTOBER 2025 Monetary Policy Report Manufacturing purchasing managers index (PMI) The momentum was driven by an upsurge in trade, signalled further improvement in overall business hotels, transport, communication, and services related conditions, rising to 59.2 in July-August 2025 from 58.1 to broadcasting; financial, real estate and professional in Q1:2025-26, supported by strong domestic orders. services; and public administration, defence and other Business expectations for manufacturing exhibited services (Chart III.19a). continued optimism, while the new export orders Construction activity, which is labour-intensive, index recorded a moderation, displaying the US tariffs- recorded strong growth in Q1:2025-26, partly owing related impact. India's flash manufacturing PMI stood to higher government's infrastructure spending. at 58.5 in September, well above its long-run average High frequency indicators of construction – steel (Chart III.18a). consumption and cement production – remained steady during July-August (Chart III.19b). To enhance competitiveness and ease of doing business, the government has implemented Real gross value added of trade, hotels, transport, a simplified two slab GST 2.0 with effect from communication, and services relating to broadcasting September 22, 2025.8 In addition, the Government has inched up by 8.6 per cent in Q1:2025-26 (6.0 per cent announced a host of other structural reforms which in Q4:2024-25). Trade activity continued to exhibit would improve productivity, competitiveness, and resilience in Q2, as indicated by robust growth in boost potential of the industrial sector (Table III.13). issuances of e-way bills and healthy expansion in GST collections during July-August. Indicators of III.2.3 Services transportation services displayed a mixed picture in Services sector remained the main driver of gross Q2 – toll collections remained robust in July-August, value added in the economy, recording an eight- while domestic air passenger traffic contracted during quarter high growth of 9.0 per cent in Q1:2025-26 and the same period. Air and port cargo traffic remained in contributed more than three-fourth to overall growth. expansionary zone with modest growth in July. Chart III.18: PMI Manufacturing and Services a. PMI Manufacturing b. PMI Services (Index) (Index) 70 60 50 40 30 20 10 0 PMI manufacturing New orders PMI services New business New export orders No change New export business No change Future output Business expectations Notes: PMI>50: Expansion; PMI< 50: Contraction; and * Flash PMI release. Source: HSBC, S&P Global. 8 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2163555 68 RBI Bulletin October 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-luJ 52-guA *52-peS 70 60 50 40 30 20 10 0 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 52-guA *52-peS 61.6 58.5Monetary Policy Report OCTOBER 2025 Table III.13: Key Government Initiatives to Support Industrial Growth and Energy Self-Reliance Measures Details and Purpose National Deepwater Exploration To harness India’s offshore energy resources, boosting energy self-reliance and reducing dependence on foreign Mission fuel imports, advancing India’s energy security. Task Force for Next-Generation To evaluate and streamline laws, rules, and procedures related to economic activities, reducing compliance costs Reforms and fostering innovation, entrepreneurship, and growth for startups, MSMEs, and entrepreneurs. Opening Nuclear Sector to To enable private sector participation in nuclear energy and technology, expanding opportunities in energy and Private Players technological innovation. A ₹1 lakh crore employment scheme providing ₹15,000 to newly employed youth, aimed at benefiting 3 crore PM Viksit Bharat Rozgar Yojana young Indians and supporting inclusive economic development. National Critical Minerals To explore 1,200 sites to secure minerals vital for energy, industry, and defence, ensuring access to critical Mission resources for strategic sectors. Made in India Semiconductor To launch the country’s first domestically manufactured semiconductor chip by year-end, marking a major step in Chip strengthening domestic technology manufacturing. High-Powered Demography To address national security challenges arising from illegal migration and demographic imbalances in border areas, Mission thereby enhancing border security and stability. Source: Press Information Bureau (PIB). Financial, real estate and professional services that financial services have kept the momentum rose by 9.5 per cent in Q1:2025-26, contributing a during Q2. major part to service sector growth (43.8 per cent) as Corporate performance in services sector well as to aggregate growth (33.7 per cent). Bank credit strengthened in Q1:2025-26. Operating profit of information technology firms improved to 5.4 per growth improved during Q2 from the last quarter, cent during Q1 from 2.4 per cent in the previous while bank deposit growth witnessed moderation. Life quarter due to moderated growth in staff costs. Non- insurance premium expanded at a robust pace in July, IT services firms recorded robust operating profit of while non-life insurance premium registered modest 11.3 per cent during Q1, despite having moderated growth (Table III.14). All these indicators suggest from the previous quarter (Chart III.20). Chart III.19: Services Sector a. Growth of Service Sector Components b. Construction Indicators (Y-o-y growth in per cent) (Y-o-y growth in per cent) 25 20 20 15 9.8 15 10 5 10 0 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2023-24 2024-25 2025-26 0 Construction -5 Trade, hotels, transport, communication and services related to broadcasting Financial, real estate & professional services Public administration, defence and other services Finished steel consumption Cement production Sources: NSO; Office of Economic Adviser; and Joint Plant Committee. RBI Bulletin October 2025 69 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 52-guA 9.5 8.6 7.6 10.0 6.1OCTOBER 2025 Monetary Policy Report Table III.14: Services Sector y-o-y growth (Y-o-y, per cent) Indicators 2024-25 2025-26 Q1 Q2 Q3 Q4 Q1 Jul Aug Sep 1 PMI: Services (>50 indicates growth over previous month) 60.5 59.6 58.7 58.0 59.3 60.5 62.9 61.6* Construction 2 Steel consumption 15.3 11.8 7.8 11.9 7.9 7.3 10.0 3 Cement production 0.4 3.2 8.7 12.4 8.0 11.6 6.1 Trade, Hotels, Transport, Communication and Services related to Broadcasting 4 Commercial vehicle sales 3.7 -11.0 1.2 1.5 -0.6 5 Domestic air passenger traffic 5.6 7.2 11.4 12.0 5.3 -2.5 -0.5 6 Domestic air cargo 7.1 7.6 4.6 3.1 6.6 4.8 7.1 7 International air cargo 18.4 21.9 15.0 1.3 4.7 4.2 4.5 8 Freight traffic 5.1 0.4 1.5 -0.4 2.4 0.0 9 Port cargo 3.9 6.2 -1.7 9.0 5.6 4.0 2.5 10 Toll collection: volume 5.6 7.6 9.8 15.1 16.2 14.8 16.1 11 Petroleum consumption 3.9 1.0 5.4 -1.8 0.5 -3.9 2.6 12 GST E-way bill 16.0 16.8 16.9 19.4 20.5 25.8 22.4 13 GST revenue 10.1 8.9 8.3 10.4 11.8 7.5 6.5 Financial, Real Estate and Professional Services 14 Credit outstanding 13.9# 13.0 11.2 11.0 9.5 10.0 10.0 10.4 15 Bank deposits 10.6# 11.5 9.8 10.3 10.1 10.2 10.2 9.5 16 Life insurance premium 22.9 16.5 -6.6 -4.3 4.3 22.4 -5.2 17 Non-life insurance premium 13.5 1.8 10.8 1.7 8.8 2.6 1.6 Notes: #: Excluding impact of merger; * : Flash PMI release. Sources: CEIC; NSO; HSBC, S&P Global; MOSPI; Insurance Regulatory and Development Authority of India (IRDAI); and RBI staff estimates. Real estate activity displayed buoyancy in stamp duty collections of state governments (Chart Q1:2025-26 as reflected in robust registration and III.21a). All-India housing prices recorded a modest growth in Q4:2024-25, with prices declining in Delhi Chart III.20: Operating Profit Growth (Chart III.21b). Public administration, defence, and (Y-o-y growth in per cent) other services (PADO) grew at a 12-quarter high of 40 9.8 per cent in Q1. The centre’s revenue expenditure, 35 excluding interest payments and subsidies, expanded 30 by 18.6 per cent during July-August. Growth in other 25 services like health, education and other personal 20 services remained strong, alongside a recovery in 15 11.3 government consumption in Q1. 10 5.4 Services PMI indicated strong expansion, as it, 5 rose to 61.7 in July-August 2025 from an average of 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 59.3 in Q1:2025-26. The strong reading of services PMI 2023-24 2024-25 2025-26 was supported by robust demand and new business Services (IT) Services (non-IT) activity (Table III.14). The composite PMI index inched Note: Results are based on 2,951 listed non-government non-financial companies for Q1:2025-26. up from 60.0 in Q1 to 62.1 in Q2 (up to August). PMI Source: RBI staff estimates. manufacturing and PMI services readings for India 70 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 Chart III.21: Housing Sector a. Registration and Stamp Duties b. Housing Price Index (Y-o-y growth in per cent) (Y-o-y growth in per cent) 16 16 14 14 12 12 10 9.9 10 8 6 8 4 3.1 6 2 0 4 -2 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 0 2023-24 2024-25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Mumbai Delhi Bengaluru 2023-24 2024-25 2025-26 Chennai All India Sources: CAG; and RBI. have remained the highest globally since July 2022 resilient services sector, healthy balance sheets of and April 2023, respectively. financial entities and corporates, and congenial financial conditions are expected to boost aggregate III.3 Conclusion demand and growth. Structural reforms and GST Economic activity remained resilient, mainly rationalisation are likely to mitigate the adverse supported by strong rural demand and robust impact of trade uncertainty surrounding US tariffs. government expenditure. Revival in manufacturing The headwinds emanating from prolonged geopolitical and persistent strong performance of services sector tensions, persisting global uncertainties, and volatility drove the recent momentum in aggregate output. in global financial markets continue to pose risks to the Going ahead, sustained buoyancy in rural economy, growth outlook. RBI Bulletin October 2025 71OCTOBER 2025 Monetary Policy Report IV. Liquidity Conditions and rates in the current easing cycle. Bank credit growth, despite lower than last year, continues to be healthy Financial Markets and supportive of real economic activity. The financing from non-bank sources has increased, reflecting higher Domestic financial markets remained resilient and reliance on market-based funding and offsetting the relatively stable in contrast to volatile global markets drag from muted bank credit growth. during H1:2025-26. The Reserve Bank ensured IV.1 Liquidity Conditions and the Operating sufficient liquidity in the banking system. Money Procedure of Monetary Policy market rates moved in tandem with the policy repo rate The Reserve Bank of India Act, 1934 requires and shifts in liquidity conditions. Transmission to the Reserve Bank to place the operating procedure lending and deposit rates remained robust. Market- relating to the implementation of monetary policy based, non-bank sources of financing more than made and changes thereto from time to time, if any, in the up for the moderation in bank credit growth in H1. public domain. The Reserve Bank’s extant Liquidity Introduction Management Framework, implemented in February During H1:2025-26, global financial markets 2020, has been operative for more than five years.1 turned intermittently volatile amidst heightened Since then, the financial landscape has undergone trade-related and geopolitical uncertainties. Advanced several structural changes, including the expanding economy central banks have adopted a cautious footprint of digital payments, operationalisation of data-dependent approach, given large uncertainties a 24×365 payment systems and adoption of “Just- clouding the macroeconomic outlook. Global bond in-Time” release of funds for centrally sponsored yields, especially at the longer end, hardened in the schemes. These developments have profoundly wake of elevated and rising public debt. Global equity altered the liquidity management paradigm of the markets gained in H1 amidst recurrent bouts of sell- banking system, further compounded by volatile offs. The US dollar traded with a weakening bias, capital flows with their attendant implications for reflecting trade policy uncertainty, fiscal concerns, system liquidity. and shifting expectations about the Fed’s policy path A disconcerting development from a liquidity (see Chapter V for details). management perspective of the Reserve Bank has been In contrast to volatile global markets, domestic the gradual shrinking of the share of uncollateralised financial markets remained resilient and relatively call money market in total overnight money market stable during H1. The Monetary Policy Committee volume. In this regard, questions were raised on the appropriateness and efficacy of the weighted average reduced the policy rate cumulatively by 75 bps call rate (WACR) as the operating target of monetary during H1. Liquidity in the banking system policy. Against this backdrop, the Reserve Bank remained in surplus, mainly supported by durable constituted an Internal Working Group whose major liquidity injections by the Reserve Bank and pick- recommendations suggested status quo in continuing up in government spending. Money market rates with the existing framework (Box IV.1). remained largely aligned to the policy rate, facilitating transmission to other markets (bond and credit 1 The revised liquidity management framework was announced on markets). Monetary policy transmission was aided by February 6, 2020, in the Statement on Developmental and Regulatory Policies, and operationalised on February 14, 2020. The salient features a sizeable and faster decline in lending and deposit of the framework were given in the Monetary Policy Report of April 2024. 72 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 Box IV.1: Review of the Extant Liquidity Management Framework – Major Recommendations Operating Target • Transient liquidity shall be managed primarily through 7-day repo/ reverse repo operations and • The WACR should continue as the operating other operations of tenors from overnight up to 14 target of monetary policy. WACR, being an days at the discretion of the Reserve Bank, based on uncollateralised rate, reflects credit/counterparty its assessment of the system liquidity requirement. risk that is not masked by collateral. Furthermore, WACR exhibits a high degree of correlation with • The variable rate auction mechanism shall be other money market rates. With the participants continued for conducting repo/reverse repo in the call money market being entities under its operations as bids received in such auctions regulatory purview, the Reserve Bank has better provide useful signal for assessing the true extent control over the WACR. From this perspective, of funds required from (or to be deployed with) the collateralised market rates were not deemed the central bank. Instruments under the extant to be appropriate as the operating target as these Liquidity Management Framework were deemed segments are dominated by non-bank entities not to be sufficient for meeting the durable liquidity regulated by the Reserve Bank and, as such, do not needs of the system and hence, the toolkit to reflect the dynamics of the inter-bank market for manage durable liquidity remains unchanged. reserves. Minimum Daily Reserve Requirement Policy Corridor • It was decided to continue with the daily minimum • With regard to the appropriate corridor width, it requirement of 90 per cent of the prescribed cash was noted that while a wider corridor can encourage reserve ratio (CRR). While acknowledging that higher inter-bank activity, it also entails greater reducing the minimum daily requirement may volatility in overnight rates, thereby hindering the provide greater headroom to banks to effectively transmission to short-term rates. At the same time, manage their liquidity over the maintenance period, a narrow corridor, while providing the advantage of it entailed risks of inducing greater volatility in the better anchoring of short-term rates, may come at WACR, especially towards the end of the reporting the cost of reduced incentives for banks to transact cycle. The case for no change was also due to the among themselves. On balance, it was decided observation that at the system level, banks rarely to continue with the existing symmetric corridor maintain daily reserve balances below 95 per cent of 50 bps width, with the policy repo rate at the of the prescribed CRR. middle. Standalone Primary Dealers’ (SPDs) Participation in Liquidity Management Instruments LAF Operations • Banks faced challenges in forecasting their liquidity • SPDs were already allowed to participate in all repo position for a longer period resulting in their lower participation in 14-day main operations. This operations irrespective of the tenor effective March undermined the efficacy of main operations for 26, 2025. Therefore, SPDs need not be given access liquidity management. Accordingly, 14-day Variable to the Marginal Standing Facility (MSF), as, unlike Rate Repo/Variable Rate Reverse Repo (VRR/ banks, they have neither reserve requirements nor VRRR) auctions were discontinued as the main unforeseen payment obligations beyond market operation. hours. RBI Bulletin October 2025 73OCTOBER 2025 Monetary Policy Report During H1:2025-26, the Monetary Policy repo (VRR) auctions effective June 11, 2025 and Committee reduced the policy repo rate by 75 basis started variable rate reverse repo (VRRR) auctions points (bps) – a 25 bps cut in April followed by a 50 from June 27, 2025. On June 25, 2025, the Reserve bps cut in June. With a cumulative rate cut of 100 bps Bank announced extension in the market timings of since February 2025, the Monetary Policy Committee both collateralised and uncollateralised segments of in its June policy noted that monetary policy was left the money market to facilitate market development, enhance price discovery, and help banks optimise with very limited space to support growth under the their liquidity requirements. Furthermore, the prevailing circumstances. Accordingly, it recalibrated aggregate limit available to Standalone Primary the stance of monetary policy to neutral from Dealers (SPDs) under the Standing Liquidity Facility accommodative. The Reserve Bank also announced a was increased from ₹10,000 crore to ₹15,000 crore reduction in the CRR by 100 bps to 3.0 per cent of net beginning April 2, 2025. demand and time liabilities (NDTL) in a staggered manner during September-November 2025. This Drivers and Management of Liquidity reduction in four equal tranches of 25 bps each with System liquidity, as measured by the net effect from the fortnights beginning September 6, balances under the liquidity adjustment facility October 4, November 1, and November 29, 2025 will (LAF), transitioned to surplus in H1:2025-26 from release primary liquidity of about ₹2.5 lakh crore deficit in H2:2024-25 (Chart IV.1). The Reserve Bank’s into the banking system by December 2025. Besides durable liquidity injections during Q4:2024-25 along providing durable liquidity, the CRR cut would also with increase in government spending drove this reduce the cost of funds for the banks, thereby transition. facilitating transmission to the credit market. On a net basis, average daily absorption In view of surplus liquidity conditions, the amounted to ₹2.31 lakh crore in H1 (up to September Reserve Bank discontinued the daily variable rate 28, 2025) as against average daily injection of ₹0.36 Chart IV.1: 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. 74 RBI Bulletin October 2025 42-tcO-81 42-voN-20 42-voN-71 42-ceD-20 42-ceD-71 52-naJ-10 52-naJ-61 52-naJ-13 52-beF-51 52-raM-20 52-raM-71 52-rpA-10 52-rpA-61 52-yaM-10 52-yaM-61 52-yaM-13 52-nuJ-51 52-nuJ-03 52-luJ-51 52-luJ-03 52-guA-41 52-guA-92 52-peS-31 52-peS-82Monetary Policy Report OCTOBER 2025 lakh crore in H2:2024-25. Changes in the Government facility (SDF) balances remained elevated. Of the of India (GoI) cash balances, expansion in currency in average total absorption under the LAF at ₹2.52 lakh circulation (CiC) and volatile capital flows emerged as crore during H1, average placement under the SDF the major drivers of liquidity during H1. The leakage constituted about 72.6 per cent (₹1.84 lakh crore), in the banking system liquidity due to the increase while the remaining surplus was absorbed through in currency demand, buildup in GoI cash balances VRRR auctions. Banks’ holding of elevated SDF and the Reserve Bank’s forex market operations was balances, inter alia, reflects their high precautionary more than compensated by the reduction in CRR and demand for liquidity given the changing payments the Reserve Bank’s durable liquidity augmenting system landscape. Moreover, lower credit demand measures during H2:2024-25 and H1:2025-26. The resulted in a larger deployment of funds by banks Reserve Bank’s Open Market Operations (OMOs) under the SDF. purchases and term repo operations in Q1:2025- To improve monetary transmission during the 26 more than offset the drag on liquidity from the current easing cycle, the Reserve Bank complemented seasonal expansion in currency in circulation (CiC). frontloaded rate cuts with the infusion of sufficient Liquidity conditions, however, moderated in Q2 on liquidity in the banking system. Continuing its account of buildup in GoI cash balances and RBI’s liquidity injection measures of Q4:2024-25, the forex operations (Table IV.1). Reserve Bank injected durable liquidity amounting With liquidity conditions remaining in surplus, to ₹2.65 lakh crore through nine OMO purchases banks’ recourse to the MSF averaged at ₹0.02 lakh and one term VRR auction during April-May 2025 crore during H1:2025-26, while daily standing deposit (Table IV.2). Table IV.1: Liquidity – Key Drivers and Management (₹ crore) 2024-25 2025-26 H1 H2 Q1 Q2* H1* Drivers (i) CiC [withdrawal (-) /return (+)] 33,551 -2,37,928 -1,00,724 22,792 -77,932 (ii) Net Forex Purchases (+)/ Sales (-) 70,402 -3,61,635 3,892 -1,45,483 -1,41,591 (iii) GoI Cash Balances [build-up (-) / drawdown (+)] -1,50,494 1,85,231 -96,083 -1,34,720 -2,30,803 (iv) Excess Reserves [build-up (-) / drawdown (+)] 36,768 1,572 34,163 -4,704 29,459 Management (i) Net OMO Purchases (+)/ Sales (-) -24,040 2,83,386 2,39,213 10 2,39,223 (ii) Required Reserves [including both change in NDTL and CRR] -55,613 76,450 -25,190 40,865 15,675 (iii) Term Repo Auctions - 1,82,964 25,731 - 25,731 Memo Item (i) Long term Forex Swaps Buy/Sell (+)/ Sell/Buy (-) - 2,19,245^ - - - (ii) Net Absorption (+)/ Injection (-) as at end-period 84,651 -172 3,07,793 56,274 56,274 Note: 1. (+) / (-) sign suggests accretion/depletion in banking system liquidity. 2. Data pertains to the last Friday of the respective period. 3. *: Data for Q2 and H1:2025-26 are up to September 26, 2025. 4. ^: approximate values. Source: RBI. RBI Bulletin October 2025 75OCTOBER 2025 Monetary Policy Report rates hovered near the floor of the LAF corridor Table IV.2: Reserve Bank’s Liquidity Measures amidst large surplus liquidity, the Reserve Bank since January 2025 resumed VRRR auction on June 27, 2025, after a gap Period Liquidity Measures Amount Injected (in ₹ crore) of nearly eight months. Since then, the Reserve Bank Q4:2024-25 a. OMO purchases (6) 2,44,561 has conducted 23 VRRR auctions of maturity ranging b. Term VRRs (3) 1,82,964 c. Forex Swaps (3) 2,19,245* from overnight to 8-days. In general, the auctions April 2025 a. OMO purchases (5) 1,20,000 elicited better response from banks, with an average b. Term VRR (1) 25,731 offer-cover ratio of 0.83, compared to the response May 2025 a. OMO purchases (4) 1,19,203 received in VRR auctions (Chart IV.2b). When the Total 9,11,704* banking system faced transient liquidity tightness Note: Figures in parentheses denote number of auctions. *: Indicates aproximate value. due to tax related outflows on select days, thirteen Source: RBI. VRR auctions of overnight to 6-day maturity were also conducted in Q2:2025-26. The Reserve Bank The Reserve Bank remained nimble and agile in maintained sufficient liquidity in the banking system its liquidity management operations and ensured during H1 to meet the productive requirements of sufficient liquidity in the banking system to support the economy. transmission to money and credit markets. With liquidity conditions improving during H1:2025- As on September 26, 2025, reserve money 26, the demand for transitory liquidity moderated expanded by 4.5 per cent (y-o-y) as against 6.0 per since April 2025, as reflected in the low bid-cover cent a year ago. Adjusted for the CRR change, growth ratios in the daily VRR auctions (Chart IV.2a). Tepid in reserve money stood at 8.4 per cent (7.4 per cent response amidst sufficient surplus liquidity a year ago). The higher growth in reserve money prompted the Reserve Bank to discontinue the daily reflected the expansion in currency in circulation. VRR auctions effective June 11, 2025. As overnight As on September 19, 2025, growth in money supply Chart IV.2: Offer/Bid-cover Ratio and Banks’ Preference for Liquidity a. Liquidity Conditions and Bid-cover b. Bid/Offer-Co ver Ratio of Variable Ratio of Daily VRRs Rate Operations (Ratio, left scale; Per cent, right scale) (Ratio) 1.2 2.0 2.0 0.96 1.8 1.6 1.5 1.0 (10) 1.4 1.0 0.76 0.73 1.2 0.5 0.8 0.63 (9) (1) 1.0 0.0 (3) 0.8 0.6 0.6 -0.5 0.36 0.53 00 .. 24 -1.0 0.4 0.32 (11) (5) 0.0 -1.5 (27) 0.2 0.01 0 (1) 0 0.0 Overnight 2-3 4-6 7-8 14 Tenor Net LAF to NDTL (RHS) Bid Cover ratio Variable rate repo Variable rate reverse repo Note: Figures in parentheses indicate number of operations. Source: RBI. 76 RBI Bulletin October 2025 5202 ,61 naJ 5202 ,22 naJ 5202 ,72 naJ 5202 ,13 naJ 5202 ,6 beF 5202 ,21 beF 5202 ,81 beF 5202 ,42 beF 5202 ,30 raM 5202 ,70 raM 5202 ,31 raM 5202 ,81 raM 5202 ,12 raM 5202 ,62 raM 5202 ,20 rpA 5202 ,80 rpA 5202 ,61 rpA 5202 ,32 rpA 5202 ,92 rpA 5202 ,60 yaM 5202 ,31 yaM 5202 ,91 yaM 5202 ,32 yaM 5202 ,92 yaM 5202 ,40 nuJ 5202 ,01 nuJ 5202 ,61 peS 5202 ,22 peS 5202 ,52 peSMonetary Policy Report OCTOBER 2025 (M3) decelerated to 9.2 per cent (y-o-y) from 10.4 per to a lesser extent than short-term yields, in response cent a year ago primarily reflecting a deceleration to domestic developments and global cues. Equity in aggregate deposit growth. The money multiplier markets remained buoyant, despite bouts of volatility increased to 5.8 as on September 19, 2025, from 5.6 a amidst tariff related uncertainty. The Indian rupee year ago, reflecting the impact of the CRR cut. traded with a depreciating bias against the US dollar in H1 but remained amongst the least volatile major IV.2 Domestic Financial Markets EM currencies. Overall, monetary policy, along Domestic financial markets remained resilient with liquidity easing measures, has contributed to and relatively stable. Money market rates evolved favourable financial conditions by influencing both in sync with the policy rate trajectory and transition money and bond markets (Box IV.2). In the credit in system liquidity. Long-term government bond market, growth in bank credit has witnessed an yields eased during the current easing cycle, albeit uptick in the recent months. Box IV.2: Impact of Monetary Policy Surprises on Financial Conditions Monetary policy primarily influences short-term long-difference specification with lagged controls interest rates in an economy through changes in the (Jordà and Taylor, 2025)3: policy rate. Its impact on the real economy, however, y α βhmps γh y ε; for h (1) is routed through the changes in overall financial t h t t conditions across market segments. Therefore, the w Δh+er =e y + y – + y Δis t-1h +e cut mulat ∈iv e {0 c ,h 1a ,2n ,…ge , Nin } FCI t h t h t- effectiveness of monetary policy can be gauged from over a window of h days, mps is the policy shock at Δ + = + 1 t its effect on financial conditions. Accordingly, to time t and βh traces the cumulative change in FCI over examine the impact of monetary policy shocks on a window of h days following the policy shock. overall financial conditions in the Indian context, Related literature also suggests asymmetric impact a high-frequency financial conditions index (FCI), of monetary policy on financial market indicators. based on select indicators from money, government Financial frictions, credit constraints, and time-varying securities (G-sec), corporate bond, equity, and forex risk premia are some of the potential drivers of this markets is used (Bandyopadhyay et al., 2025). In the asymmetric impact. To test the differential impact of extant literature, it is common to use high-frequency monetary policy tightening vis-à-vis easing on financial interest rate changes around central bank policy conditions, equation (1) is modified as follows (Adrian announcements for identifying monetary policy et al., 2024): shocks. Following this approach, policy shocks are y α ρhmps mps- δhmps mps γh y ε (2) estimated as the first principal component of policy- t h t t t day changes in the Overnight Indexed Swap (OIS) rates w Δh+er =e m p +s a nd mt.ps- a +re in dicatt .or va+ r +ia bl e Δs t-o1 +c aptture t t of various maturities (Barakchian and Crowe, 2013; policy tigh+tening and easing, respectively. mps and t Nakamura and Steinsson, 2018).2 Further, to examine mps- take the value of 1 when mps is positive+ and t the response of FCI to monetary policy shocks, a local negative, respectively, and 0 otherwise. So, while δh t projections framework is employed for the sample traces the response for policy tightening, ρh traces the period January 2014 to August 2025 with the following response for policy easing. 2 OIS rates of 1, 3, 6, 9-month and 1-year maturities are used. 3 Jorda and Taylor (2025) show that local projections using the long difference specification considerably alleviates the problem of bias and autocorrelation in small samples. RBI Bulletin October 2025 77OCTOBER 2025 Monetary Policy Report The results indicate that a policy surprise equivalent à-vis easing as a positive shock is found to have a larger to a 100 basis points increase in the 1-year OIS rate is tightening impact on FCI than the easing impact of a associated with a 0.13 standard deviation tightening negative shock (Chart IV.2.1 b). This finding highlights in FCI over the week following the policy shock (Chart the need for judicious use of forward guidance and IV.2.1 a). Moreover, the findings also reaffirm the liquidity measures along with rate actions to reinforce asymmetric impact of monetary policy tightening vis- the effect of policy easing. Chart IV.2.1: Response to a Monetary Policy Surprise a. Unconditional Response b. Response to Tightening versus Easing (Standard Deviations of FCI) (Standard Deviations of FCI) Notes: The left chart plots the estimates of βh from (1) while the right chart plots the estimates of -ρh (to signify easing surprise) and δh (tightening surprise) from (2); Shaded areas represent the 90 per cent confidence bands constructed using Newey-West adjusted standard errors. Source: RBI Staff estimates. References: Barakchian, S. M., & Crowe, C. (2013). Monetary policy matters: Evidence from new shocks data. Journal of Adrian, T., Gelos, G., Lamersdorf, N., & Moench, E. Monetary Economics, 60(8), 950-966. (2024). The asymmetric and persistent effects of Fed policy on global bond yields. Bank for International Jordà, Ò., & Taylor, A. M. (2025). Local projections. Settlements, Working paper-1195. Journal of Economic Literature, 63(1), 59-110. Bandyopadhyay, P., Kumar, A., Kumar, P. and Nakamura, E. and Steinsson, J. (2018). High-Frequency Bhattacharyya, I. (2025), Financial Conditions Index Identification of Monetary Non-Neutrality: The for India: A High-frequency Approach. Reserve Bank Information Effect. The Quarterly Journal of Economics, of India Bulletin, June. https://rbi.org.in/Scripts/BS_ Volume 133, Issue 3, August 2018, pp.1283–1330, ViewBulletin.aspx?Id=23451 https://doi.org/10.1093/qje/qjy004 IV.2.1 Money Market auctions absorbing surplus liquidity since end-June, the WACR increased and traded closer to the policy During H1:2025-26, money market rates largely moved in line with the policy repo rate and the evolving rate since mid-July 2025.4 Generally, movements in liquidity conditions. The weighted average call rate the WACR reflected transient liquidity conditions, (WACR) – the operating target of monetary policy softening at the beginning of the month on higher – remained within the policy corridor and hovered near its floor during April to early July reflecting large 4 The WACR moved close to the ceiling of the LAF corridor (MSF Rate) on July 23, 2025, mainly due to Goods and Services Tax outflows, causing surplus liquidity in the banking system. With VRRR liquidity strain. 78 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 Chart IV.4: Money Market Rates and Policy Corridor (Per cent) 8.50 8.25 8.00 7.75 7.50 7.25 7.00 6.75 6.50 6.25 6.00 5.75 5.50 5.25 5.00 4.75 WACR Triparty repo rate Market repo rate 3-month CP rate 3-month CD rate 91-day T-bill rate SDF rate Repo rate MSF rate Sources: Financial Benchmarks India Pvt Ltd.; and RBI. RBI Bulletin October 2025 79 42-voN-62 42-ceD-51 52-naJ-30 52-naJ-22 52-beF-01 52-raM-10 52-raM-02 52-rpA-80 52-rpA-72 52-yaM-61 52-nuJ-40 52-nuJ-32 52-luJ-21 52-luJ-13 52-guA-91 52-peS-70 52-peS-62 government spending and hardening during the latter half due to tax outflows. The WACR showed better alignment with the policy repo rate in Q2:2025-26, with its spread over the policy repo rate narrowing to (-)8 bps compared to (-)17 bps in Q1 (Chart IV.3a). Volatility in the WACR, as measured by the exponential weighted moving average (EWMA)5, declined since April 2025 after remaining elevated in H2:2024-25 (Chart IV.3.b). Overnight rates in the collateralised segment, i.e., triparty repo and market repo, broadly moved in tandem with the WACR during H1:2025-26 (Chart IV.4.) Money market activity was dominated by the collateralised segments (tri-party and market repo), although their share in overnight money market volume declined slightly to 97 per cent. Concomitantly, Mutual funds remained major lenders in tri-party the uncollateralised segment, i.e., the call money repo, with their share increasing by 2 percentage market witnessed a modest increase in its share points to 68 per cent in H1:2025-26 from H2:2024- to above 3 per cent in September 2025. This could 25. However, in the market repo segment, the share be partly attributed to the extension of call money of mutual funds’ lending reduced to 40 per cent in market timings effective July 1, 2025 (Table IV.3). H1:2025-26 from 46 per cent in H2:2024-25. The share Chart IV.3: Policy Corridor and WACR a. Liquidity, Policy Corridor and b. Average Spread of WACR over Weighted Average Call Rate Repo Rate and Volatility (Per cent, left scale; ₹ Lakh Crore, right scale) (Basis points, left scale; Volatility [exponential weighted 7.50 4.5 moving average], right scale) 7.25 4.0 7.00 33 .. 05 6.75 2.5 6.50 2.0 6.25 1.5 6.00 01 .. 50 5.75 0.0 5.50 -0.5 5.25 -1.0 5.00 -- 21 .. 05 4.75 -2.5 4.50 -3.0 Net liquidity surplus (+)/deficit (-) (RHS) Weighted average call rate Standing deposit facility rate Repo rate Spread (In absolute terms) Marginal standing facility rate Exponential weighted moving average (RHS) Sources: RBI; and RBI staff calculations. 42-tcO-91 42-voN-70 42-voN-62 42-ceD-51 52-naJ-30 52-naJ-22 52-beF-01 52-raM-10 52-raM-02 52-rpA-80 52-rpA-72 52-yaM-61 52-nuJ-40 52-nuJ-32 52-luJ-21 52-luJ-13 52-guA-91 52-peS-70 52-peS-62 20 20 0.10 18 15 0.08 15 13 12 11 0.06 10 7 6 6 0.04 5 5 0.02 2 1 0 0.00 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS 5 EWMA is an improvement over simple variance as it assigns greater weight to more recent observations. EWMA expresses volatility as a weighted average of past volatility with higher weights assigned to more recent observations.OCTOBER 2025 Monetary Policy Report (CP) and certificates of deposit (CDs) declined by around 150 bps from end-March 2025 to end-August 2025, larger than the policy rate reduction of 100 bps since February. The average spread of CDs and CPs over the policy repo rate also narrowed substantially to 36 bps and 59 bps, respectively, in H1:2025-26 from 91 bps and 105 bps, respectively, in H2:2024-25. The average spread of treasury bills (T-Bills) over the policy repo rate turned negative, amidst ample liquidity in the banking system (Chart IV.4). Fresh issuances of CDs declined to ₹4.8 lakh crore of foreign banks’ lending in market repo also declined in H1:2025-26 from ₹6.6 lakh crore in H2:2024-25, reflecting the narrowing of the wedge in deposit and to 29 per cent from 31 per cent during the same period. On the borrowing side, public sector banks (PSBs) credit growth. Tenor-wise, CD issuances in the shorter remained the major players in tri-party repo, although tenor (up to 91-day) increased on account of declining their share reduced to 28 per cent in H1:2025-26 from interest rate. There was a concomitant decline in 40 per cent in H2:2024-25. During the same period, longer tenor issuances (Table IV.4). The issuances of the share of private sector banks increased to 28 per CPs in the primary market increased to ₹8.8 lakh crore cent from 22 per cent. PSBs had a relatively smaller during H1:2025-26 from ₹8.2 lakh crore in H2:2024-25 presence in market repo, with their share remaining (Chart IV.5a). The money market risk premia (spread steady at 6 per cent over the same period. of 3-month CP rate over 91-day T-bills rate) declined in July but increased subsequently in August, broadly The term segments of the money market witnessed faster monetary policy transmission aided by surplus tracking the movement in the policy uncertainty liquidity conditions. The rates on commercial paper index (Chart IV.5.b). Chart IV.5: Primary Issuances of Commercial Paper a. System Liquidity, Issuances and WADR b. Commercial Paper Spread and Policy Uncertainity (₹ Lakh Crore, left scale; Per cent , right scale) (Percentage points, left scale; Index, right scale) 4 7.8 7.6 3 7.4 2 1.6 13 .051.421.271.151.151.50 1.091.461.85 1.63 1.301.601.53 1.181.607.2 7.0 1 6.8 0 6.6 -1 6.4 6.2 -2 6.0 -3 6.25 5.8 Average daily liquidity surplus (+)/deficit(-) Issuance Spread of 3 Month Commercial Paper over 91-Day Treasury-bill Weighted average discount rate India Policy Uncertainty Index Note: Net liquidity adjustment facility represents absorption (through SDF and VRRR) net of injection (through MSF and VRR). Sources: RBI; Clearing Corporation of India Limited F-TRAC; www.policyuncertainty.com; and RBI staff estimates. 80 RBI Bulletin October 2025 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 52-guA 52-peS 1.3 180 1.2 160 1.1 1.0 123.22 140 0.9 120 0.8 0.7 100 0.6 0.73 80 0.5 0.4 60 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS Table IV.3: Average Volume and Share in Overnight Money Market (₹ Lakh Crore) 2024-25 2025-26 H1 H2 Q1 Q2* H1* Call/Notice 0.10(2.1) 0.11(2.2) 0.15(2.7) 0.16(2.9) 0.16(2.8) Triparty Repo 3.30(68) 3.62(70) 3.70(66) 3.67(66) 3.68(66) Market Repo 1.48(30) 1.42(28) 1.74(31) 1.71(31) 1.73(31) Total 4.88(100) 5.16(100) 5.59(100) 5.54(100) 5.57(100) Notes: 1. Figures in parentheses denote share of each segment in overnight money market. Figure may not add up to total due to rounding off. 2. *: Up to September 26, 2025. Sources: Clearing Corporation of India Ltd.; and RBI.Monetary Policy Report OCTOBER 2025 Table IV.4: Tenor wise Break up for CD Issuances Chart IV.6: Issuer Profile of Commercial Paper (₹ Lakh Crore) (₹ Lakh Crore) 2.0 2024-25 2025-26 1.8 H1 H2 Q1 Q2* H1* 1.6 Up to 91 Days 3.93(73) 3.74(57) 1.95(83) 1.55(64) 3.50(74) 1.4 92-180 Days 0.20(4) 0.17(3) 0.11(5) 0.34(14) 0.45(9) 1.2 1.0 181-365 Days 1.22(23) 2.64(40) 0.28(12) 0.53(22) 0.81(17) 0.8 Total 5.35(100) 6.56(100) 2.34(100) 2.42(100) 4.76(100) 0.6 Notes: 1. Figures in parentheses denote share of each maturity profile. 0.4 2. Figure may not add up to total due to rounding off. 0.2 3. *: Up to September 26, 2025. Sources: Clearing Corporation of India Limited; and RBI staff estimates. 0.0 With favourable interest rates incentivising Financial institutions Corporates market-based financing, corporates dominated the CP Housing finance companies NBFCs Limited Liability Partnership primary market, with an average share of 48 per cent Sources: RBI; Clearing Corporation of India Limited F-TRAC; and RBI staff estimates. for H1:2025-26. The average share of non-banking financial companies (NBFCs), however, reduced to 29 IV.2.2 Government Securities (G-sec) Market per cent in H1:2025-26 from 33 per cent in H2:2024- The Government Securities (G-sec) market 25. It could be partly attributed to the reversal of risk remained broadly resilient, albeit volatile during weights on bank lending to NBFCs effective from H1:2025-26 amidst favourable domestic outlook April 1, 2025, improving the overall credit availability but a challenging global environment. The 10-year to NBFCs (Chart IV.6). In terms of maturity profile, G-sec yield moved in the range of 6.19 - 6.77 per cent the 91-180 days segment had the largest share (51 during H1:2025-26 (up to September 26, 2025). At per cent) in fresh CP issuances, followed by the 31-90 the beginning of H1, yields softened reflecting the days segment (Table IV.5). reduction in the policy repo rate, change in the policy stance from neutral to accommodative, open market Table IV.5: Maturity Profile of CP Issuances operation (OMO) purchases by the Reserve Bank, and (₹ Lakh Crore) Tenor H2: 2023-24 H1: 2024-25 H2: 2024-25 H1: 2025- softening crude oil prices. Yields declined further in 26* May and early June, driven by lower-than-expected 7- 30 days 0.48(7) 0.63(8) 0.51(6) 0.42(5) April CPI inflation print, market expectations of a 31-90 days 2.32(35) 2.35(31) 2.33(28) 3.06(35) rate cut in June, continued OMO purchases by the 91-180 days 3.11(47) 3.94(52) 4.24(52) 4.54(51) Reserve Bank and record surplus transfer from the 181-365 days 0.77(12) 0.64(8) 1.11(14) 0.82(9) Reserve Bank to the Government of India. Total 6.67(100) 7.55(100) 8.19(100) 8.84(100) G-sec yields firmed up post the June policy Outstanding 3.89 3.98 4.43 4.89 (as at end- announcement, as the change in stance from period) ‘accommodative’ to ‘neutral’ diminished market Notes: 1. Figures in parentheses denote share of each maturity profile. Figure may not add up to total due to rounding off. expectations of a deeper rate cut cycle. After 2. *: Up to September 26, 2025. Sources: Clearing Corporation of India Limited F-TRAC; and RBI. remaining broadly stable in the first half of July, RBI Bulletin October 2025 81 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD 52-raM 52-nuJ 52-peSOCTOBER 2025 Monetary Policy Report Chart IV.7: 10-year Par Yield, Repo Rate and Liquidity Conditions (Per cent, left scale; ₹ lakh crore, right scale) 8.00 5.0 4.5 7.75 Fiscal concerns due to GST 4.0 7.50 rationalisation Higher GDP growth 3.5 7.25 Retention of credit ratings 7.00 Lower CPI Print Rise in CPI print 3.0 Change in policy stance 2.5 6 66. ..7 255 50 Lo w e r C PI P r in t R isi n g g eo - p o l iti c a l ten s i o n lo w er U S lab o u r m a r k et da t a 112 ... 050 6.00 Rise in US yields 0.5 Reduced GDP numbers tracking declin e in US 5.75 expectation of rate cut and buyback yields/crude oil price 0.0 5.50 announcements -0.5 5.25 -1.0 Total liquidity (RHS) 10-year par yield Repo rate Sources: RBI; and Financial Benchmarks India Pvt. Ltd. G-sec yields began to harden in the second half tenor and hardened at the longer end in September amidst uncertainty surrounding the US trade (Chart IV.8). deals and rise in crude oil prices. In August, yields The average trading volume in G-secs and T-bills continued to harden, tracking movements in US increased in H1:2025-26 relative to H2:2024-25 (Chart yields and heightened trade uncertainties from IV.9). The weighted average yield (WAY) on traded the imposition of additional tariffs on India. maturities for G-secs and T-bills declined by 38 bps and Yields softened briefly on S&P’s upgrade of India’s 89 bps, respectively, in H1 as compared to H2:2024-25. sovereign ratings on August 14, 2025 but rose again on fiscal concerns stemming from lower growth in direct tax collections and rationalisation of GST rates (Chart IV.7). Beginning September, yields have eased on receding fiscal concerns, softening US yields and declining crude oil prices. The yields on T-bills softened during April and May amidst the policy repo rate cut and large surplus liquidity. The higher-than-expected repo rate cut and persistent surplus liquidity led to further moderation in yields in June. Yields hardened in August amidst the uncertainty on the interest rate trajectory with the MPC maintaining status quo on both rate and stance, and liquidity absorption by the Reserve Bank that raised short-term rates. T-bill rates softened at the short end till the three-month 82 RBI Bulletin October 2025 52-rpA-20 52-rpA-70 52-rpA-21 52-rpA-71 52-rpA-22 52-rpA-72 52-yaM-20 52-yaM-70 52-yaM-21 52-yaM-71 52-yaM-22 52-yaM-72 52-nuJ-10 52-nuJ-60 52-nuJ-11 52-nuJ-61 52-nuJ-12 52-nuJ-62 52-luJ-10 52-luJ-60 52-luJ-11 52-luJ-61 52-luJ-12 52-luJ-62 52-luJ-13 52-guA-50 52-guA-01 52-guA-51 52-guA-02 52-guA-52 52-guA-03 52-peS-40 52-peS-90 52-peS-41 52-peS-91 52-peS-42 Chart IV.8: FBIL T-Bill Benchmark Yield to Maturity (Per cent) 6.35 6.20 6.05 6.06 5.90 5.75 5.61 5.60 5.57 5.45 5.40 5.30 5.15 5.00 Tenor April 09, 2025 August 06, 2025 June 06, 2025 September 26, 2025 Source: Financial Benchmarks India Pvt. Ltd. syaD 7 syaD 41 htnoM 1 shtnoM 2 shtnoM 3 shtnoM 4 shtnoM 5 shtnoM 6 shtnoM 7 shtnoM 8 shtnoM 9 shtnoM 01 shtnoM 11 shtnoM 21Monetary Policy Report OCTOBER 2025 Chart IV.9: Trading Volumes and Yield a. G-Sec b. T-Bills (₹ crore, left scale; Per cent, right scale) (₹ crore, left scale; Per cent, right scale) 80,000 7.22 7.5 8,000 7521 7.5 70,000 6.99 66971 7.0 6799 6445 6.78 6.96 6.77 5968 60,000 57427 53731 6.40 6.5 6,000 6.51 6.5 50,000 6.0 41041 40,000 5.5 4,000 5.62 5.5 30,000 5.0 20,000 4.5 2,000 4.5 10,000 4.0 0 3.5 0 3.5 H2:2023-24 H1:2024-25 H2:2024-25 H1:2025-26 H2:2023-24 H1:2024-25 H2:2024-25 H1:2025-26 Average daily volume Average daily volume Weighted average yield of traded maturities Weighted average yield of traded maturities Sources: Clearing Corporation of India Limited; and RBI staff estimates. The overall dynamics of the yield curve are IV.10a), which is partly attributed to (i) demand- captured by its latent factors, viz., level, slope and supply mismatches in the G-sec market; and (ii) curvature6. Yields have declined at the short end, shift in investment pattern of insurance companies, while they have hardened at the long end of the term pension and provident funds from government bonds structure. This bear steepening of the yield curve to equities and corporate bonds. The average level during H1:2025-26 widened the term spread (Chart of yields increased by 2 bps, while the slope of the Chart IV.10: G-Sec Yield Curve a. Shifts b. Changes in Level, Slope and Curvature (Per cent) (Basis points) 7.40 7.29 7.20 7.10 6.98 6.80 6.50 6.20 5.90 5.60 5.30 Mar 28 - Apr 08- June 05- Aug 05 - Cumulative Maturity in years Apr 08 June 05 Aug 05 Sept 26 (Mar 28 - Sept 26) Mar 28, 2025 April 09, 2025 June 06, 2025 August 06, 2025 September 26, 2025 Level Slope Curvature Sources: Financial Benchmarks India Pvt. Ltd; Clearing Corporation of India Limited; and RBI staff estimates. 6 The level is the average of par yields of all tenors up to 30-years published by FBIL and the slope (term spread) is the difference in par yields of 3-months and 30-year maturities. The curvature is calculated as twice the 15-year yield minus the sum of 30-year and 3-month yields. RBI Bulletin October 2025 83 52.0 57.1 52.3 57.4 52.6 57.7 52.9 57.01 52.21 57.31 52.51 57.61 52.81 57.91 52.12 57.22 52.42 57.52 52.72 57.82 52.03 57.13 52.33 57.43 52.63 57.73 52.93 57.04 52.24 57.34 52.54 57.64 52.84 57.94 116 115 100 92 85 70 55 42 4442 40 28 24 25 16 18 17 10 6 6 2 -5 -9 -20 -24 -35OCTOBER 2025 Monetary Policy Report yield curve steepened by 116 bps (Chart IV.10b). The maturity of the outstanding stock of G-secs increased curvature, on the other hand, also increased by 92 from 13.24 years at end-March 2025 to 13.58 years as bps, reflecting the hardening bias in the mid-segment. on September 26, 2025, the weighted average coupon In the Indian context, the level and curvature of declined from 7.25 per cent to 7.21 per cent over the yield curve are found to have more information the same period. During H1:2025-26, four buyback content on future macroeconomic outcomes than the auctions were announced for an aggregate amount slope owing to market segmentation, unlike in AEs of ₹1.06 lakh crore with a view to retiring some of (Patra et al, 2022)7. the Government of India’s debt, in the backdrop of Cross-country evidence broadly suggests that improved cash position. The market response to the G-sec yields have not declined proportionately to the auctions was modest with the Reserve Bank accepting changes in policy rate by central banks during the offers aggregating to only ₹0.87 lakh crore against the current easing cycle, although there are variations notified amount of ₹1.06 lakh crore. across countries. These variations reflect varying initial conditions, heterogeneous impact of trade The weighted average spread of cut-off yields and geopolitical uncertainties on macroeconomic on state government securities over G-sec yields conditions and the outlook, inflation expectations of comparable maturities was 38 bps in H1:2025-26 and investor sentiment across countries (Chart IV.11). (up to September 26) (Chart IV.12) as against 30 bps As part of active debt consolidation, the Reserve in H2:2024-25. The average inter-state spread on Bank conducted seven switch auctions on behalf of securities of 10-year tenor (fresh issuances) was 5 bps the Government of India amounting to ₹1,29,697 in H1:2025-26 (up to September 26) as against 4 bps in crore during H1:2025-26. Even as the weighted average H2:2024-25. Chart IV.11: Changes in Policy Rate and 10-year Yields (Basis points) 50 39 16 20 -10 -0.3 -- 74 00 -41 -25-35 -56 -46 -24 -100 -75 -75-82 -100 -100 -130 -125 -160 -190 -166 -220 -250 -250 -280 -310 -340 -370 -400 -400 -430 Change in policy rate Change in yield Source: Bloomberg; CEIC; and RBI Staff estimates. 7 Patra, M.D., Joice, J., Kushwaha, K.M., and I. Bhattacharyya (2022), “What is the Yield Curve telling us about the Economy?”, Reserve Bank of India Bulletin, June. 84 RBI Bulletin October 2025 SU aerA oruE KU aisyalaM ocixeM dnaliahT aisenodnI aissuR aidnI 35,000 67 62 30,000 57 25,000 52 47 20,000 42 37 15,000 32 27 10,000 22 5,000 17 12 0 7 rpA-30 rpA-80 rpA-51 rpA-22 rpA-92 yaM-60 yaM-31 yaM-02 yaM-72 nuJ-30 nuJ-01 nuJ-71 nuJ-42 luJ-10 luJ-80 luJ-51 luJ-22 luJ-92 guA-50 guA-21 guA-91 guA-62 peS-20 peS-90 peS-61 peS-32 Chart IV.12: State Government Securities - Amount Raised and Spread (₹ crore, left scale; Basis points, right scale) Total accepted amount Cumulative weighted average spread (RHS) Source: Financial Benchmarks India Pvt. Ltd.Monetary Policy Report OCTOBER 2025 IV.2.3 Corporate Bond Market 26 and uncertainty about the growth outlook (Table IV.6). The average 3-year credit default swap spreads Corporate bond yields declined tracking (trading overseas for the State Bank of India and ICICI softening of G-sec yields while spreads exhibited a Bank) increased by 5 bps and 3 bps, respectively, in mixed trend during H1:2025-26 (up to September 25). H1:2025-26 (up to September 26) over H2:2024-25. Issuer-wise, the average yield on AAA-rated 3-year bonds of public sector undertakings (PSUs), financial Primary issuances of listed corporate bonds institutions (FIs) and banks softened by 62 bps (to in domestic markets increased to ₹4.0 lakh crore 6.86 per cent), while those of non-banking financial during H1:2025-26 (up to August 2025) from ₹3.3 lakh crore during the corresponding period of the companies (NBFCs) and corporates declined by 56 previous year due to favourable cost conditions bps (to 7.15 per cent) and 50 bps (to 7.12 per cent), engendered by monetary policy easing (Chart IV.14a). respectively, in September 2025 (up to September Overseas issuances declined significantly to ₹3,243 25) over March 2025 (Chart IV.13a). The average crore during H1:2025-26 (up to August 2025) from bond market risk premium (i.e., the spread of 3-year ₹23,014 crore during the same period last year AAA corporate bond yields over 3-year G-sec yields) amidst conducive environment for raising resources reduced from 83 bps to 79 bps for PSUs, FIs and in domestic markets. Almost the entire resource banks; while it increased from 106 bps to 108 bps mobilisation in the corporate bond market (i.e., 98.9 for NBFCs; and from 98 bps to 105 bps for corporates per cent) was through the private placement route in H1:2025-26 (in September 2025 over March 2025), in H1 (up to August 2025). Outstanding investments amidst mixed corporate earnings results for Q1:2025- by foreign portfolio investors (FPIs) in corporate 26 (Chart IV.13b). bonds stood at ₹1.29 lakh crore as on September The risk premia generally moderated for higher 26, 2025 as against ₹1.21 lakh crore at end-March rated bonds, while it widened for lower rated bonds 2025, with the utilisation of investment limits amidst mixed corporate performance in Q1:2025- declining marginally to 15.7 per cent from 15.8 per Chart IV.13: AAA-rated 3-Year Corporate Bond Yield and Spreads a. Yield b. Spread (Per cent) (Basis points) 8.5 8.0 7.20 7.5 7.12 7.0 6.5 6.86 6.0 5.98 5.5 5.0 NBFCs Corporates PSUs, FIs & Banks 3-Yr G-sec NBFCs PSUs, FIs & Banks Corporates Note: Chart 1b plots monthly average spreads over G-secs. Data is up to September 25, 2025. Source: Fixed Income Money Market and Derivatives Association of India. RBI Bulletin October 2025 85 42-rpA-10 42-rpA-12 42-yaM-11 42-yaM-13 42-nuJ-02 42-luJ-01 42-luJ-03 42-guA-91 42-peS-80 42-peS-82 42-tcO-81 42-voN-70 42-voN-72 42-ceD-71 52-naJ-60 52-naJ-62 52-beF-51 52-raM-70 52-raM-72 52-rpA-61 52-yaM-60 52-yaM-62 52-nuJ-51 52-luJ-50 52-luJ-52 52-guA-41 52-peS-30 52-peS-32 130 120 110 108 100 105 90 80 70 79 60 50 40 30 20 10 0 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 52-guA 52-peSOCTOBER 2025 Monetary Policy Report Table IV.6: Financial Markets - Rates and Spread Interest Rates Spread (bps) (Per cent) (over corresponding risk-free rate) Instrument September 2024 March 2025 September 2025 September 2024 March 2025 September 2025 1 2 3 4 5 6 7 Corporate Bonds (i) AAA (1-yr) 7.92 7.76 6.67 117 115 98 (ii) AAA (3-yr) 7.80 7.62 7.12 97 98 105 (iii) AAA (5-yr) 7.70 7.60 7.21 86 89 86 (iv) AA (3-yr) 8.55 8.43 8.21 172 178 215 (v) BBB-minus (3-yr) 12.14 12.09 11.89 531 544 583 Note: Yields and spreads are computed as monthly averages. Data is up to September 25, 2025. Source: Fixed Income Money Market and Derivatives Association of India. cent (Chart IV.14b). Secondary market activity picked IV.2.4 Equity Market up, with trading volume at ₹10.1 lakh crore during During H1:2025-26 so far (up to September H1:2025-26 (up to August 2025) vis-à-vis ₹6.3 lakh 26), Indian equity markets remained on an upward crore during the corresponding period last year trajectory, despite bouts of volatility amidst trade (Chart IV.14c). policy uncertainty and geopolitical tensions. After Chart IV.14: Corporate Bond Market Activity a. Domestic and Overseas Issuances b. FPI Investments in Corporate Bonds (₹ lakh crore) (₹ lakh crore, left scale, Per cent, right scale) 6 5.3 5 4.9 4.6 4.6 3.9 4.0 4 3 2 1 0.2 0.1 0.3 0.3 0.3 0.0 0 Domestic Overseas Total investment % of limit utilised c. Secondary Market Turnover (₹ lakh crore) *: Data is up to August 2025. Sources: Securities and Exchange Board of India; National Securities Depository Limited; and Prime Database. 86 RBI Bulletin October 2025 32-2202 :2H 42-3202:1H 42-3202 :2H 52-4202 :1H 52-4202:2H *62-5202 :1H 1.4 1.29 18.0 1.2 1.03 1.08 1.18 1.21 17.5 1.0 17.0 0.8 16.5 0.6 16.0 0.4 0.2 15.5 0.0 15.0 32-peS-92 42-raM-82 42-peS-03 52-raM-82 52-peS-62 2.5 2.3 2.3 2.2 2.1 2.1 2.0 1.9 1.7 1.5 1.5 1.6 1.5 1.3 1.4 1.4 1.4 1.2 1.1 1.0 1.0 0.5 0.0 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 52-guAMonetary Policy Report OCTOBER 2025 an initial decline, markets recovered in April as September amidst a steep hike in H1B visa fees and tariff-pause announcements by the US and low reports of fresh tariffs by the US. domestic CPI inflation print for March 2025 lifted Overall, the BSE Sensex increased by 3.9 per cent sentiments. Markets again came under pressure with in H1:2025-26 (up to September 26). The broader the escalation of India-Pakistan conflict in early May, market indices outperformed the benchmark during but rose sharply thereafter in mid-May, following H1, with the BSE MidCap and BSE SmallCap index the announcement of a ceasefire agreement and gaining by 7.7 per cent and 12.1 per cent, respectively a record surplus transfer by the Reserve Bank to (Chart IV.15a). India Volatility Index, a measure of the Government of India. The rally continued in short-term expected volatility of Nifty 50, declined by June aided by the front loading of monetary policy 10.2 per cent during the same period. All BSE sectoral easing by the Reserve Bank, although a rise in geo- indices, except BSE Information Technology Index political tensions in the Middle-East led to some registered gains during the period (Chart IV.15b). correction. In July, markets underperformed other global markets amidst amplified tariff uncertainty After remaining net buyers in Q1:2025-26, FPIs and mixed corporate earnings results for Q1:2025-26. turned net sellers in Q2. The Domestic Institutional Equity markets gained in mid-August amidst India’s Investors (DIIs), especially mutual funds, acted as a sovereign rating upgrade by a major global credit counterbalancing force by remaining net buyers and rating agency and the announcement of GST reforms, provided resilience to the Indian equity markets. before negative global cues contributed to market The inflows into mutual funds have been supported losses in late-August. Investor sentiment revived in by sustained and expanding reach of systematic early-September, buoyed by the release of higher- investment plans (SIPs). Average monthly contribution than-expected GDP growth data for Q1:2025-26 and to mutual funds through the SIP route increased to strong manufacturing and services PMI data releases. ₹27,464 crore in H1:2025-26 (up to August) as against However, markets declined in the second half of ₹25,905 crore during H2:2024-25 (Chart IV.16). Chart IV.15: Stock Market Performance a. Benchmark and Broad Indices Performance Index (End-March 2025 = 100) 120 112.1 115 110 107.7 105 103.9 100 95 90 85 80 BSE Sensex BSE MidCap BSE SmallCap Source: Bloomberg. RBI Bulletin October 2025 87 52-raM-82 52-rpA-70 52-rpA-71 52-rpA-72 52-yaM-70 52-yaM-71 52-yaM-72 52-nuJ-60 52-nuJ-61 52-nuJ-62 52-luJ-60 52-luJ-61 52-luJ-62 52-guA-50 52-guA-51 52-guA-52 52-peS-40 52-peS-41 52-peS-42 b. Performance of BSE Sectoral Indices (Per cent) 30 25 24.0 20 15 12.613.314.5 1 50 1.41.71.93.13.63.94.35.26.36.36.86.96.97.09.0 0 -5 -10 -7.7 ygolonhceT noitamrofnI seitilitU rewoP ytlaeR xeknaB GCMF erachtlaeH ygrenE saG & liO lateM secivreS laicnaniF moceleT elbaruD remusnoC USP noitacinummoC sdooG latipaC slairtsudnI secivreS yranoitercsiD remusnoC otuAOCTOBER 2025 Monetary Policy Report through public issues aggregated to ₹4,430 crore (i.e., Chart IV.16 Average Resource Mobilisation in SIPs about 2.4 per cent of the total primary issuances) (₹ crore) 30,000 27,464 during H1 (up to August 2025) as against ₹4,664 crore 25,905 in H2:2024-25. 25,000 22,321 IV.2.5 Foreign Exchange Market 18,151 20,000 15,052 The global foreign exchange market experienced 13,623 15,000 12,372 11,352 increased volatility during April–September 2025, 9,409 10,000 reflecting shifts in US policy expectations, evolving trade frictions, and fluctuating risk sentiments. The 5,000 US dollar, after reflecting weakness in early 2025, 0 remained range-bound with intermittent bouts of volatility, mirroring the uncertainties around trade, fiscal, and monetary policy trajectories in *: Up to August 2025. the US. In this environment, while most emerging Source: Association of Mutual Funds of India. market (EM) currencies recorded appreciations, the Overall, FPIs were net sellers (₹0.7 lakh crore up Indian rupee (INR) exhibited two-way movements to September 26) while DIIs were net buyers (₹3.7 with a depreciating bias. After trading with an lakh crore up to September 26) in the equity market appreciating bias during April and early May 2025, during H1:2025-26 (ChartIV.17a.). Resource the INR depreciated in June-September due to the mobilisation in primary equity markets stood at ₹1.8 escalation in the US-India trade tensions, widening lakh crore during H1:2025-26 (up to August 2025) as trade deficit and FPI outflows (Chart IV.18a). The against ₹2.2 lakh crore in H2:2024-25 (Chart IV.17b). INR also experienced higher volatility in Q1 as The amount raised by small and medium enterprises reflected by the option-implied volatility as well as 88 RBI Bulletin October 2025 22-1202:1H 22-1202:2H 32-2202:1H 32-2202:2H 42-3202:1H 42-3202:2H 52-4202:1H 52-4202:2H *62-5202:1H Chart IV.17: Institutional Investments and Resource Mobilisation a. Net Investment in Indian Equities by b. Resource Mobilisation in Equity Markets Institutional Investors (₹ lakh crore, left scale; ₹ crore, right scale) (₹ lakh crore) 1.0 0.8 0.6 0.4 0.2 0.0 -0.2 -0.4 -0.6 -0.8 -1.0 Note: IPO: Initial Public Offer. QIP: Qualified Institutional Placement. FPO: Follow-on Public Offer. *: Up to September 26; ^: up to August 2025. Sources: Capitaline; National Securities Depository Limited; and Securities and Exchange Board of India. 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 52-guA *52-peS 2.2 6,000 2.0 1.8 5,103 4,664 5,000 1.6 4,430 1.4 3,666 4,000 1.2 3,000 1.0 2,456 0.8 2,000 0.6 1,419 0.4 1,000 914 0.2 0.0 0 QIPs & Preferential allotment IPOs, FPOs & Rights DIIs FPIs of which: SME IPOs/ FPOs (RHS) 32-2202:1H 32-2202:2H 42-3202:1H 42-3202:2H 52-4202:1H 52-4202:2H ^62-5202:1HMonetary Policy Report OCTOBER 2025 Chart IV.18: Indian Rupee and Volatility a. Movements of Indian Rupee, US Dollar b. 1-Month At-the-Money Implied Volatility and and EM currency Index GARCH Volality (Index (March 31, 2025 = 100), left scale; (Per cent) Index (March 31, 2025 = 100), right scale) 8 7 6 5 4.4 4 3.5 3 2 1 0 ₹/US$ Emerging market currency index (RHS) US DXY (RHS) 1-Month At-the-Money (ATM) Implied Volatility GARCH Note: An increase (decrease) in the index denotes currency appreciation (depreciation). Sources: Financial Benchmarks India Pvt. Ltd.; Refinitiv Eikon; Bloomberg and Authors’ calculation. GARCH8 estimates, but volatility moderated in interest rate differential between the US and India. August as global risk sentiment stabilised and The decline was moderate for longer maturities, as markets priced in trade-related risks (Chart IV.18.b). the 12-month premia declined modestly to 2.11 per Notwithstanding these movements, the INR remained cent in H1 (up to September 26) from 2.25 per cent in among the least volatile EM currencies during this H2:2024-25. period, supported by strong fundamentals as evident The 40-currency real effective exchange rate from a narrower current account deficit, steady (REER) of the INR depreciated by 2.6 per cent services exports, resilient private remittances and between March 2025 and August 2025 in line with robust foreign exchange reserves. The INR depreciated by 3.5 per cent against the US dollar on September 26 over end-March 2025, as opposed to the appreciating trends registered by several peer EM currencies (Chart IV.19). A few peer EM currencies like Argentine peso and Turkish lira however, recorded higher depreciation than INR during this period. Forward premia declined sharply at the beginning of H1:2025-26 and continued to ease till May 2025 but rose moderately thereafter (Chart IV.20). On an average, the 1-month forward premia eased to 1.94 per cent in H1 (up to September 26) from 2.51 per cent in H2:2024-25, in tandem with the narrowing 8 Generalised Autoregressive Conditional Heteroskedasticity (GARCH) RBI Bulletin October 2025 89 42/tcO/10 42/tcO/52 42/voN/81 42/ceD/21 52/naJ/50 52/naJ/92 52/beF/22 52/raM/81 52/rpA/11 52/yaM/50 52/yaM/92 52/nuJ/22 52/luJ/61 52/guA/90 52/peS/20 52/peS/62 106 106 104 104 102 102 100 100 98 98 96 96 94 92 94 90 92 88 90 86 52/raM/82 52/rpA/11 52/rpA/52 52/yaM/90 52/yaM/32 52/nuJ/60 52/nuJ/02 52/luJ/40 52/luJ/81 52/guA/10 52/guA/51 52/guA/92 52/peS/21 52/peS/62 Chart IV.19: Movements in Major EM Currencies (Per cent) 11.5 10 6.8 5.1 5.5 5.7 5 1.7 0 -1.5 -1.1 -1.0 -0.4 -5 -3.5 -3.1 -5.8 -10 -8.3 -15 -20 -19.3 -25 September 26, 2025 over end-March 2025 Sources: Financial Benchmarks India Pvt. Ltd.; and Refinitiv Eikon. osep enitnegrA aril hsikruT YXD SU eepur naidnI gnod esemanteiV osep enippilihP osep naelihC haipur naisenodnI elbur naissuR nauy esenihC tiggnir naisyalaM thab dnaliahT dnar nacirfA htuoS laer nailizarB osep nacixeMOCTOBER 2025 Monetary Policy Report Overall Financial Conditions Overall financial conditions eased beginning mid-March until July with a softening trend observed across the money, G-sec and corporate bond markets, as suggested by the financial conditions index based on twenty Indian financial market indicators9 at daily frequency. Since August, financial conditions tightened marginally on account of tightness in money and corporate bond markets (Chart IV.22). Overall financial conditions remain benign, auguring well for domestic economic activity, going forward. IV.2.6 Bank and Non-Bank Credit Bank Credit: Aggregate Trends the movement in nominal effective terms (Chart Growth in bank credit moderated in H1:2025-26, IV.21a). The depreciation of INR’s 40-currency REER although the recent data shows signs of an uptick. remained modest relative to that of some major Across bank groups, credit growth of public sector economies (Chart IV.21.b). banks (PSBs) remained higher (11.4 per cent) than Chart IV.21: Trend in Real Effective Exchange Rate (REER) a. India's 40-Currency REER b. Cross Country Movement in REER (Per cent, left scale; Index [2015-16 = 100], right scale) (August 2025 over March 2025) 3 110 (Per cent) 2 106 1 102 98.8 0 98 -1 -1.3 -2 -1.4 94 -3 90 Relative Price Effect 40-Currency REER (RHS) Nominal Exchange Rate Effect Change in REER (m-o-m) Sources: RBI; and Bank for International Settlements. 9 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. https://rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=23451 90 RBI Bulletin October 2025 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 10 5 0 -2.6 -5 -10 -15 -20 anitnegrA yekruT SU anihC aidnI senippilihP napaJ aisenodnI acirfA htuoS dnaliahT KU eropagniS aisyalaM aissuR dnalreztiwS aerA oruE lizarB ocixeM Chart IV.20: Movements in INR-USD Forward Premia (Per cent) 4.5 4.0 3.5 3.0 2.5 2.3 2.2 2.0 2.1 2.2 1.5 1.0 0.5 1 month 3 months 6 months 12 months Source: Bloomberg. 42/tcO/10 42/tcO/52 42/voN/81 42/ceD/21 52/naJ/50 52/naJ/92 52/beF/22 52/raM/81 52/rpA/11 52/yaM/50 52/yaM/92 52/nuJ/22 52/luJ/61 52/guA/90 52/peS/20 52/peS/62Monetary Policy Report OCTOBER 2025 Chart IV.22: 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 Government securities Corporate bond Financial conditions index(standardised) Equity Foreignexchange Note: The financial conditions index provides a metric based on its historical average; in this context, a zero value corresponds to a financial system operating at the historical average level of all the financial indicators included in the index. To present the results, standardised index is used. Source: RBI staff estimates. that of private sector banks (PVBs) (9.4 per cent), while (y-o-y) as on September 19, 2025 from 13.0 per cent credit growth of foreign banks decelerated (Chart a year ago, although an uptick in momentum was IV.23a). On an annual basis (as on September 19, witnessed in Q2 (Chart IV.24). 2025), PSBs continued to account for the largest share The asset quality of SCBs improved during of the incremental credit and their share rose further 2025-26 (up to June 2025), with the overall gross vis-à-vis PVBs and foreign banks (Chart IV.23.b). non-performing assets (NPA) ratio declining to 2.3 Growth in non-food bank credit of scheduled per cent in June 2025 from 2.7 per cent a year ago commercial banks (SCBs) decelerated to 10.2 per cent (Chart IV.25a). Asset quality improved across all RBI Bulletin October 2025 91 4202-01-10 4202-01-31 4202-01-52 4202-11-60 4202-11-81 4202-11-03 4202-21-21 4202-21-42 5202-10-50 5202-10-71 5202-10-92 5202-20-01 5202-20-22 5202-30-60 5202-30-81 5202-30-03 5202-40-11 5202-40-32 5202-50-50 5202-50-71 5202-50-92 5202-60-01 5202-60-22 5202-70-40 5202-70-61 5202-70-82 5202-80-90 5202-80-12 5202-90-20 5202-90-41 5202-90-62 Tighter conditions Easier conditions Chart IV.23: Credit flow across Bank Groups a. Growth b. Share in In cremental Credit (Per cent, y-o-y) (Per cent) 25 100 3.7 2.3 20 90 80 15 38.0 11.4 70 42.3 10 10.4 9.4 60 5 6.9 50 0 40 -5 30 59.7 54.0 -10 20 10 0 20-Sep-24 19-Sep-25 Public sector banks (including regional rural banks) Foreign banks Private banks (including small finance banks) All SCBs Public sector banks Private sector banks Foreign banks Source: RBI. 22-raM 22-nuJ 22-peS 22-ceD 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD 52-raM 52-nuJ 52-peSOCTOBER 2025 Monetary Policy Report to 5.3 per cent in H1:2025-26 from 1.2 per cent in H2:2024-25 (Chart IV.26a). The growth in adjusted non-food credit (i.e., non-food bank credit plus non- SLR investments by banks) was lower at 10.1 per cent in as on September 2025, as compared to 12.9 per cent in the previous year (Chart IV.26.b). As on August 22, 2025, excess holdings of statutory liquidity ratio (SLR) securities by SCBs decreased to 7.9 per cent of their net demand and time liabilities (NDTL) from 8.5 per cent at end- March 2025 (Chart IV.27). Excess SLR holdings are a component of the liquidity coverage ratio (LCR). They also provide collateral buffers to banks for availing funds under the LAF as well as wholesale funding in the triparty repo and market repo segments. major sectors, except the agriculture sector (Chart IV.25.b). Bank Credit10: A Sectoral Perspective Growth in non-SLR investments of banks Disaggregated trends in bank credit show (comprising investments in CPs, bonds, debentures, moderation in credit growth across sectors. Although and shares of public and private corporates) increased industrial credit softened, it remained modestly above Chart IV.25: Stressed Assets and Non-Performing Assets of SCBs a. Overall Loan Portfolio of SCBs b. Sectoral Non -Performing Assets (Per cent) (Per cent) 10 9 8 7 6 5 4 3 2.8 2 2.3 Stressed assets ratio Non-performing assets ratio Source: RBI. 92 RBI Bulletin October 2025 12-raM 12-nuJ 12-peS 12-ceD 22-raM 22-nuJ 22-peS 22-ceD 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD 52-raM 52-nuJ 14 12 10 8 6 6.3 4 2.2 2 2.0 1.2 0 12-raM 12-nuJ 12-peS 12-ceD 22-raM 22-nuJ 22-peS 22-ceD 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD 52-raM 52-nuJ Chart IV.24: Non-food Credit Growth of SCBs (Per cent) 20.0 6.5 17.5 5.0 10.2 15.0 3.5 2.0 12.5 0.5 10.0 -1.0 7.5 -2.5 5.0 -4.0 2.5 -5.5 0.0 -7.0 Momentum (RHS) Base effect (RHS) y-o-y growth rate Source: RBI; and Staff estimates. Agriculture Industry Retail loans Services 32-2202:2Q 32-2202:3Q 32-2202:4Q 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1Q 62-5202:2Q 10 Overall bank credit and non-food credit data are based on fortnightly 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, covering select banks accounting for about 95 per cent of the total outstanding non-food credit extended by all SCBs. Data pertain to the last reporting Friday of the month. Data include the impact of merger of a non-bank with a bank.Monetary Policy Report OCTOBER 2025 its historical 10-year average, with nascent signs of Within the industrial sector, credit to MSMEs11 growth uptick in recent months (Table IV.7). Despite segment continued to remain buoyant, with a significant acceleration in growth during recent moderation in growth, personal loans and services months primarily contributing to its overall growth sector credit remained the main drivers of overall (Chart IV.29). Some regulatory measures such as bank credit growth (Chart IV.28 a and b). Agricultural revised guidelines on voluntary pledge of gold and and allied activities registered muted credit growth, silver jewellery as collateral for small business loans with gradual firming up in recent months. as well as the measures announced in the Union Budget helped in improving credit flow to the MSME Chart IV.27: Excess SLR of Banks segment. The revision in MSMEs classification, (Per cent of Net demand and time liabilities) wherein investment limits and turnover thresholds 13 60 have been raised substantially, also contributed 50 11 to high growth in the recent past. In contrast, 34.7 40 large industry credit registered tepid growth in 9 7.9 30 H1:2025-2612. 7 20 Among the major industrial sub-sectors, 5 infrastructure sector credit growth has been on a 10 declining path since last year, though there has 3 0 been a marginal improvement since July 2025. On the other hand, credit to all engineering and textile segments witnessed stable growth (Table IV.8). Public sector banks Private banks All SCBs Foreign banks (RHS) 11 Pertains to credit to micro, small and medium segments within *: Data up to August 22, 2025 industry. Source: RBI. 12 H1:2025-26 data up to August 2025. RBI Bulletin October 2025 93 22-1202 :1Q 22-1202 :2Q 22-1202 :3Q 22-1202 :4Q 32-2202 :1Q 32-2202 :2Q 32-2202:3Q 32-2202:4Q 42-3202 :1Q 42-3202 :2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1Q *62-5202:2Q Chart IV.26: Non-SLR Investment and Adjusted Non-food Credit a. Non-SLR Investment b. Adjusted Non-Food Credit (₹ crore) (₹ lakh crore, left scale; Per cent, right scale) 40,000 9.0 17.5 7.5 10.1 15.0 12.5 30,000 6.0 10.0 4.5 7.5 20,000 3.0 5.0 1.5 2.5 10,000 0.0 0.0 0 2024-25 H1: 2024-25 H2: 2024-25 H1: 2025-26 Adjusted non-food credit (quarterly variation) Bonds/Shares/Debentures Commercial paper Y-o-Y adjusted non-food credit growth (RHS) Source: RBI. 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1Q 62-5202:2QOCTOBER 2025 Monetary Policy Report Table IV.7: Credit Growth (y-o-y, per cent) Sectors/Sub-Sectors Long- Post- Nov-23 Mar-24 Aug-24 Dec-24 Mar-25 Jul-25 Aug-25 Term* COVID** Bank Credit 10.9 15.0 20.7 20.2 13.6 11.2 11.0 10.0 10.0 Sectoral Deployment of Bank Credit Agriculture (13.2) 11.5 14.7 18.1 20.0 17.7 12.5 10.4 7.3 7.6 Industry (22.6) 4.2 7.9 6.1 8.5 9.7 7.2 7.7 6.0 6.5 Micro and small (5.1) 8.5 15.9 16.9 14.7 13.4 9.8 8.8 21.0 20.9 Medium (2.1) 12.9 19.1 12.0 13.3 19.2 19.9 18.6 14.7 13.1 MSMEs (7.2) 9.5 16.8 15.4 14.3 15.1 12.7 11.7 19.1 18.5 Large (15.5) 2.7 4.9 2.9 6.4 7.7 5.1 6.2 0.9 1.8 Infrastructure (7.5) 3.9 4.3 2.3 6.6 3.7 1.0 1.4 1.9 2.1 Services (29.1) 13.9 18.1 25.7 23.5 13.9 11.7 12.4 10.6 10.6 Services excluding NBFCs (20.2) 12.5 18.8 29.6 28.1 14.9 14.3 15.8 14.5 14.2 NBFCs (8.9) 19.0 17.2 18.9 15.3 11.9 6.7 5.7 2.6 3.4 Personal loans (35.1) 17.8 19.7 30.0 27.5 13.9 12.0 11.7 11.9 11.8 Personal loans with unchanged risk weight (23.8) 17.3 19.6 32.6 31.9 14.3 12.7 13.2 13.8 13.8 Housing (Including Priority Sector Housing) (17.6) 17.1 20.0 36.7 36.5 13.1 11.1 10.7 9.6 9.7 Vehicle loans (3.7) 18.1 15.4 20.6 17.6 14.5 8.8 8.6 8.9 8.7 Education (0.8) 8.1 16.4 23.0 23.7 18.4 15.8 15.1 15.0 14.6 Personal loans with increased risk weight (11.3) 19.2 20.1 25.3 19.7 13.2 10.7 8.6 8.1 7.9 Credit cards (1.6) 25.2 23.8 34.2 25.6 19.9 15.6 10.6 5.6 4.4 Other personal loans (8.7) 20.8 19.6 24.9 20.7 12.3 9.2 8.0 8.1 8.1 Notes: 1. Provisional data. 2. Bank credit data is based on fortnightly Section-42 return, which covers all scheduled commercial banks, 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 the total outstanding non-food credit extended by all SCBs, pertaining to the last reporting Friday of the month. 3. *: Average of growth from August 2015 to August 2025. 4. **: Average of growth from April 2022 to August 2025 5. Figures in parentheses against each sector denote share in total non-food credit as per the latest data. Source: RBI. Chart IV.28: Sectoral Deployment of Bank Credit a. Non-food Credit Growth: Sector-wise b. Contribution to Non-food Credit Growth (Per cent, y-o-y) (Percentage points) 20 18 16 14 12 11.8 10.6 10 9.9 8 7.6 6 6.5 4 Source: RBI. 94 RBI Bulletin October 2025 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 15 10 4.1 5 3.1 1.5 1.0 0 Non-food credit Agriculture Industry Services Personal loans 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA Agriculture Industry Services Personal loansMonetary Policy Report OCTOBER 2025 Chart IV.30: Credit Growth of Services Sector: Contribution of Major Sub-components (Percentage points) 16 12 10.6 8 4.8 1.1 4 1.4 0.5 2.8 0 Trade Professional services Commercial real estate NBFCs Other services* Services (per cent, y-o-y ) Note: *: Other services include all services excluding trade, professional services, commercial real estate and NBFCs. Source: RBI. Although growth of credit to the services sector expanded at a steady pace above its long-term moderated during H1:2025-26, a gradual strengthening average, with segments such as trade and commercial has been recorded in recent months (Chart IV.30). real estate recording healthy growth (Chart IV.30 and Non-banking finance companies (NBFCs) remained Tables IV.7 & IV.9). the largest recipient of bank credit within the Credit growth in the personal loans segment services sector, and there are signs of improvement remained buoyant although decelerating from last in credit to NBFCs following the withdrawal of the year, with housing and vehicle loans being the additional risk weights w.e.f. April 01, 202513. On major contributors (Chart IV.31). In the backdrop of the other hand, credit to services excluding NBFCs exuberant growth in certain components of consumer Table IV.8: Credit Growth in Major Sub-sectors of Industry (y-o-y, per cent) Growth Aug-24 Sep-24 Dec-24 Mar-25 Jun-25 Jul-25 Aug-25 Infrastructure 3.7 2.1 1.0 1.4 -0.5 1.9 2.1 Basic metal and metal product 16.1 15.4 13.1 12.8 11.0 9.5 8.9 Textiles 6.4 5.4 5.6 8.3 8.6 6.0 6.4 Chemicals and chemical products 15.9 14.9 7.0 7.4 6.3 5.5 6.7 All engineering 16.6 15.7 19.5 22.1 22.3 23.1 19.9 Food processing 14.4 11.6 10.7 5.1 8.1 5.2 6.1 Low High Note: Within a row, darker shade of green pertains to acceleration in credit growth, while red indicates deceleration in credit growth. Source: RBI 13 https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT120A97A4D3CBCCE4AEBAAE1B7DB7DCF177D.PDF RBI Bulletin October 2025 95 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA Chart IV.29: Credit Growth of Industrial Sector: Contribution as per Size of Industries (Percentage points) 12 10 8 6.5 6 1.3 4 5.2 2 0 Source: RBI. 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA MSMEs Large Industry (per cent, y-o-y)OCTOBER 2025 Monetary Policy Report Table IV.9: Impact of Change in Risk Weights on Credit Growth (y-o-y, per cent) Growth Nov-23 Mar-24 Aug-24 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Personal loans 25.3 19.7 13.2 8.6 9.7 8.2 7.9 8.1 7.9 (with change in risk weight) NBFCs (with change in risk weight)* 18.9 15.3 11.9 5.7 2.9 -0.3 2.6 2.6 3.4 Personal loans 32.6 31.9 14.3 13.2 12.9 12.6 13.6 13.8 13.8 (no change in risk weight) Services excluding NBFCs 29.6 28.1 14.9 15.8 14.4 13.3 12.4 14.5 14.2 (no change in risk weight) Low High Notes: 1. *Risk weights were restored for NBFCs in April 2025. 2. Within a row, darker shade of green pertains to acceleration in credit growth, while red indicates deceleration in credit growth. Source: RBI credit, risk weights were raised on unsecured Though there has been a moderation in personal loans in November 2023. This prudential bank credit growth, total credit to the economy measure contributed to a sharp moderation, with remained resilient, supported by strong non-bank growth in unsecured personal lending declining intermediation. Resource mobilisation by non- to about one-third of its level in November 2023. financial corporates through market instruments such as corporate bond issuances and commercial Personal loans with unchanged risk weights grew papers has increased. The deceleration in bank credit at a robust pace (Table IV.9). Housing loans, which growth, therefore, may be interpreted in the context constitute nearly half of the lending under personal of a broader and increasingly diversified credit loans, remained range bound while growth of vehicle ecosystem, wherein non-bank channels have also loans decelerated. emerged as key sources of funding. NBFCs Credit14 Chart IV.31: Personal Loans: Contribution of Despite some deceleration in lending, NBFCs' Major Sub-components (Percentage points) credit growth remained strong at double-digit 16 levels. Industrial credit, which forms the dominant 14 portion of NBFCs' credit portfolio, displayed stable 12 11.8 10 growth, underscoring the importance of NBFCs 5.7 8 as a crucial conduit for extending credit to the 6 0.9 economy. Lending to retail loans and services 0.2 4 segments expanded at a healthy pace in H1:2025-2615 5.0 2 contributing to overall credit deployment by NBFCs 0 (Chart IV.32). 14 Data on sectoral deployment of outstanding credit from select NBFCs pertain to last day of every month. As a pilot work, the collection of monthly sectoral credit information from select NBFCs has been initiated. These NBFCs represent around 88 per cent of total credit extended by all NBFCs in upper and middle layers. 15 H1:2025-26 data up to August 2025. 96 RBI Bulletin October 2025 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA Housing Credit card outstanding Vehicle loans Other personal loans** Note: **: Other personal loans include all personal loans except housing, credit card outstanding and vehicle loans. Source: RBI.Monetary Policy Report OCTOBER 2025 Chart IV.32: Sectoral Contribution of NBFCs’ Credit Growth (Percentage points) 18 16 14 12.1 12 10 5.4 8 6 2.5 4 2 4.2 0.1 0 Source: RBI. RBI Bulletin October 2025 97 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA to the policy rate cuts and moderation in cost of funds (Chart IV.33a). The decline in deposit rates has been mainly led by bulk deposits in the wake of large surplus liquidity conditions and moderation in credit demand (Chart IV.33.b). Since the onset of the current easing cycle in February 2025, banks have adjusted their repo-linked lending rates downward by 100 bps. The marginal cost of funds-based lending rate, which has a longer reset period, has also declined. The 1-year median marginal cost of funds-based lending rate of scheduled commercial banks softened by 40 bps during February- August 2025. Consequently, the weighted average Agriculture Industry Services lending rates on fresh and outstanding rupee loans Retail loans Non-food credit declined by 58 bps (interest rate effect accounts for 71 bps)16 and 55 bps, respectively, during the same IV.3 Transmission to Lending and Deposit Rates period. On the deposit side, the weighted average domestic term deposit rates on fresh and outstanding Transmission of the cumulative policy rate cut deposits declined by 106 bps and 22 bps, respectively of 100 basis points to lending and deposit rates has (Table IV.10). been quick in the current easing cycle commencing February 2025. Banks have adjusted their lending and The share of the external benchmark-based deposit rates downwards in H1:2025-26 in response lending rate linked loans in total outstanding floating Chart IV.33: Transmission to Banks’ Lending and Deposit Rates during Feb-Aug 2025 a. Lending Rates (WALR) b. Deposit Rates (WADTDR) (Basis points) (Basis points) 20 20 0 0 -20 -20 -22 -40 -40 -55 -60 -60 -58 -80 -80 -100 -100 -100 -100 -106 -120 -120 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Repo rate Outstanding loans Fresh loans Repo rate Outstanding loans Fresh loans WALR: Weighted average lending rate; WADTDR: Weighted average domestic term deposit rate. Source: RBI. 16 The interest rate effect can be arrived at by keeping the weight constant, with the residual change in the weighted average landing rate attributed to the weight effect.OCTOBER 2025 Monetary Policy Report Table IV.10: Transmission to Banks’ Deposit and Lending Rates (Basis points) Period Repo Rate Term Deposit Rates Lending Rates WADTDR WADTDR EBLR 1-Yr. MCLR WALR WALR Fresh Deposits Outstanding (Median) Fresh Rupee Loans Outstanding Deposits Rupee Loans Retail Retail Retail Overall Interest Deposits and Bulk and Bulk Effect Rate Deposits Deposits Effect# (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Tightening Period +250 190 259 206 250 175 182 191 115 May 2022 to Jan 2025 Easing Phase -100 -64 -106 -22 -100 -40 -58 -71 -55 Feb 2025 to Aug 2025 Memo Jun – 2025 -50 -26 -36 -7 -50 -5 -58 -30 -23 Jul – 2025 0 -11 -14 -8 0 -15 19 -4 -6 Aug – 2025 0 -7 -5 -5 0 -15 -6 -11 -6 Notes: Data on EBLR pertain to 32 domestic banks. # : At constant weight. WALR: Weighted average lending rate; WADTDR: Weighted average domestic term deposit rate; MCLR: Marginal cost of funds-based lending rate; EBLR: External benchmark-based lending rate. Sources: MPD06 return; and RBI. rate loans of scheduled commercial banks increased their loans at external benchmark-based lending to 62.9 per cent as at end-June 2025 from 61.6 per rates (Chart IV.34.b). The marginal cost of funds- cent as at end-March 2025. Consequently, the share based lending rates and other legacy rates – based on of marginal cost of funds-based lending rates linked internal benchmarks and having longer reset periods loans declined (Table IV.11). Increasing share of – act as an impediment to faster policy transmission. loans linked to external benchmark has quickened Bank group-wise, the transmission to weighted the pace of transmission to lending rates. average lending rates on fresh and outstanding rupee Public sector banks still have a significant loans of private banks was higher than that of public proportion of their loans linked to marginal cost sector banks (Chart IV.35a). As alluded to earlier, the of funds-based lending rates (Chart IV.34a). On the large share of external-benchmark based loans led to other hand, private banks extend a large part of better transmission in case of private banks compared to public sector banks. However, lending rates of Table IV.11: Share of Outstanding Floating Rate private banks remained above those of public sector Loans across Interest Rate Benchmarks banks (Chart IV.35.b). The maximum pass-through Regime June 2024 March 2025 June 2025 to lending rates was witnessed among foreign banks, MCLR 38.2 34.9 33.8 EBLR 57.9 61.6 62.9 reflecting their higher share of external benchmark- Others 3.9 3.5 3.3 based lending rates and higher share of low-cost and Notes: 1. ‘Others’ include benchmark prime lending rate, base rate and wholesale deposits of lower maturity.17 other internal benchmarks. 2. Data pertain to 74 scheduled commercial banks. 3. EBLR: External benchmark-based lending rate; MCLR: Marginal 17 The proportion of external benchmark-based lending rate linked loans cost of funds-based lending rate. was the highest for foreign banks (93.5 per cent), followed by private banks Source: RBI. (87.9 per cent) and public sector banks (47.2 per cent) as at end-June 2025. 98 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 Sectoral analysis shows that the transmission to banks/sectors towards higher interest rate slabs may lending rates on fresh and outstanding loans has been reduce the extent of transmission during and easing broad-based. The pace of transmission varied across cycle. Hence, changes in the weighted average lending sectors due to varying proportion of credit portfolios rate may be decomposed into interest rate effect and linked to fixed and floating interest rates and volume effect for assessing transmission to lending differential spreads charged by banks. Even though rates, especially on fresh loans during a policy cycle.18 lending rates moderated, the shifts in volumes across During the current easing cycle (Feb-Aug 2025), the Chart IV.35: Bank Group-wise Transmission to Lending Rates a. Transmission to Lending Rates b. Lending Rates of Domestic Banks (Basis points) (Per cent) 0 11 10 9.55 -20 9.44 9 8.88 -40 8 8.06 -47 -60 -53 -55 -58 7 -63 -80 -76 6 -84 -100 -107 -120 WALR (Fresh rupee loans)-PSBs PSBs PVBs FBs SCBs PSBs PVBs FBs SCBs WALR (Fresh rupee loans)-PVBs WALR WALR 1-Year median MCLR-PSBs (Fresh rupee loans) (Outstanding loans) 1-Year median MCLR-PVBs Notes: PSBs: Public sector banks; PVBs: Private banks; FBs: Foreign banks; SCBs: Scheduled commercial banks; WALR: Weighted average lending rate; MCLR: Marginal cost of funds-based lending rate. Source: RBI. RBI Bulletin October 2025 99 22-yaM 22-guA 22-voN 32-beF 32-yaM 32-guA 32-voN 42-beF 42-yaM 42-guA 42-voN 52-beF 52-yaM 52-guA Chart IV.34: Outstanding Floating Rate Rupee Loans of SCBs across Interest Rate Benchmarks a. Public Sector Banks b. Private Banks (Per cent) (Per cent) 100 80 60 40 20 0 MCLR External benchmark Others Notes: 1. MCLR: Marginal cost of funds-based lending rate. 2. Data pertains to end-June 2025. 3. ‘Others’ include benchmark prime lending rate, base rate and other internal benchmarks. Source: Ad-hoc survey. erutlucirgA egraL yrtsudnI sEMSM erutcurtsarfnI edarT gnisuoH elciheV noitacudE rehtO snaoL lanosreP 100 80 60 40 20 0 erutlucirgA egraL yrtsudnI sEMSM erutcurtsarfnI edarT gnisuoH elciheV noitacudE rehtO snaoL lanosreP MCLR External benchmark Others 18 The interest rate effect can be arrived at by keeping the weight constant, with the residual change in the weighted average landing rate attributed to the weight effect.OCTOBER 2025 Monetary Policy Report Chart IV.36: Sector-wise Transmission to Weighted Average Lending Rates (Feb - Aug 2025) a. Fresh Rupee Loans b. Outstanding Rupee Loans (Basis points) (Basis points) 20 0 -20 -40 -36 -60 -49 -80 -70 -58 -77 -100 -82 -87 -89 -83 Interest rate effect Volume effect Transmission Sources: MPD06 return; and RBI. volume effect partially dampened transmission domestic bank groups, public sector banks charged a in large industry and vehicle loans, whereas it lower spread than private banks for housing, vehicle, complemented interest rate effect in other sectors, education, and other personal loans. Public sector thereby enhancing transmission in these sectors banks, however, charged a higher spread for micro, (Chart IV.36). small and medium enterprises loans as compared to private banks. For external benchmark-based lending rate loans, banks have increased their spreads (charged over Non-banking financial companies have been and above the benchmark rate), which dampened playing an increasingly important role in meeting the extent of transmission (Table IV.12). The spread the credit needs of the economy. They extend the on fresh rupee loans was the highest for education last mile credit to hitherto unbanked areas and loans, followed by other personal loans, and micro, provide niche financing to various sectors ranging small and medium enterprises loans. Among from real estate and infrastructure to agriculture Table IV.12: Spread of Weighted Average Lending Rates on Fresh Rupee Loans* Sectors Jan-25 Aug-25 Public sector Private Domestic Public sector Private Domestic banks banks banks banks banks banks MSME Loans 3.43 3.12 3.20 3.48 3.33 3.36 Personal Loans Housing 2.09 2.44 2.34 2.11 2.51 2.37 Vehicle 2.63 4.03 3.07 2.69 4.26 3.01 Education 3.84 4.76 4.41 3.42 5.55 4.55 Other personal loans 3.01 5.38 3.36 3.30 5.31 3.58 Note: Other personal loans include loans other than housing, vehicle, education and credit card loans. * : Calculated over the repo rate for loans linked to external benchmarks. Sources: MPD06 return; and RBI staff estimates. 100 RBI Bulletin October 2025 erutlucirgA yrtsudnI egraL sEMSM erutcurtsarfnI noitacudE elciheV gnisuoH rehtO snaoL lanosreP llarevO erutlucirgA yrtsudnI egraL sEMSM erutcurtsarfnI noitacudE elciheV gnisuoH rehtO snaoL lanosreP llarevO 20 0 -20 -25 -23 -40 -35 -41 -60 -59 -55 -80 -75 -83 -100 -92 Interest rate effect Volume effect TransmissionMonetary Policy Report OCTOBER 2025 and micro loans. Thus, non-banking financial companies enhance the reach of the credit channel of monetary transmission. The lending rates of non- banking financial companies generally tend to be higher than those of commercial banks. This reflects, inter alia, their liability structure and the risk profile of their borrowers. The degree of monetary policy transmission, therefore, differs between non-banking financial companies and scheduled commercial banks (Chart IV.37). Across bank groups, the pass-through to weighted average domestic term deposit rates on fresh and outstanding deposits was higher for public sector banks than private banks during February- August 2025 (Chart IV.38a). Interest rates on fresh the extent varied (Chart IV.38.b). The interest rates retail deposits moderated across tenors, although on savings bank deposits that comprise about 30 Chart IV.38: Deposit Rates and Banks’ Profitability a. Transmission to Term Deposit rates* b. Transmission to Fresh Retail Term (Basis points) Deposits - Tenor wise* (Basis points) Outstanding Fresh Fresh (Retail and bulk) (Retail) (Retail and bulk) c. Savings Deposit Rates of SCBs# d. Net Interest Margin (NIM) and CASA Share of SCBs (Per cent) (Per cent) Repo rate Minimum savings deposit rate Maximum savings deposit rate Notes: PSBs: Public sector banks; PVBs: Private banks; FBs: Foreign banks; SCBs: Scheduled commercial banks; WADTDR: Weighted average domestic term deposit rate; CASA: Current account and savings account; NIM: Net interest margin. *: Transmission is calculated for the period February-August 2025. #: Savings deposit rates pertain to five major banks and relate to account balances of up to Rs 1 lakh. Sources: MPD06 return; and RBI. RBI Bulletin October 2025 101 syad 41 - 7 syad 03 - 51 syad 54- 13 syad 09 - 64 syad 081- 19 syad 463 - 181 sraey 2 - 1 sraey 3 - 2 0 -20 -20 -17 -22 -200 -40 -40 -36 -42 -41 -37 -29 -60 -58 -60 -48 -80 -72 -69 -64 -1- 080 0 -91 -72 -86 -100 -99 -98 -105 -106 -120 PSBs PVBs FBs SCBs PSBs PVBs FBs SCBs PSBs PVBs FBs SCBs 7.0 45 3.8 6.0 3.7 5.5 40 5.0 3.6 4.0 35 3.5 3.0 3.4 2.5 2.0 30 3.3 3.2 25 3.1 20 3.0 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 CASA Share NIM (RHS) 91-naJ-81 91-nuJ-82 91-ceD-60 02-yaM-51 02-tcO-32 12-rpA-20 12-peS-01 22-beF-81 22-luJ-92 32-naJ-60 32-nuJ-61 32-voN-42 42-yaM-30 42-tcO-11 52-raM-12 52-guA-92 Chart IV.37: Monetary Policy Transmission to Outstanding Lending Rates of NBFCs (Basis points) 0 -11 -20 -40 -55 -60 -80 -100 -100 -120 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Policy repo rate SCBs NBFCs Sources: Ad-hoc survey; and RBI. -120OCTOBER 2025 Monetary Policy Report Table IV.13: Interest Rates on Small Savings Instruments – Q3:2025-26 Small Savings Scheme Maturity Spread$ Average G-sec Formula-based Government Difference (years) (Percentage yield# rate of Interest Announced Rate of (Percentage point) (Per cent) (Per cent) Interest (Per cent) point) (1) (2) (3) (4) (5) = (3) + (4) (6) (7) = (6) - (5) Savings Deposit - - 4.00 - Public Provident Fund 15 0.25 6.58 6.83 7.10 0.27 Term Deposits 1 Year 1 0 5.46 5.46 6.90 1.44 2 Year 2 0 5.62 5.62 7.00 1.38 3 Year 3 0 5.79 5.79 7.10 1.31 5 Year 5 0.25 6.12 6.37 7.50 1.13 Recurring Deposit Account 5 0 5.79 5.79 6.70 0.91 Monthly Income Scheme 5 0.25 6.09 6.34 7.40 1.06 Kisan Vikas Patra 115 Months 0 6.58 6.58 7.50 0.92 NSC VIII issue 5 0.25 6.26 6.51 7.70 1.19 Senior Citizens Saving Scheme 5 1.00 6.12 7.12 8.20 1.08 Sukanya Samriddhi Account Scheme 21 0.75 6.58 7.33 8.20 0.87 $: Spreads for fixing small saving rates as per the Government of India Press Release of February 2016. #: Based on semi-annualised yield on G-sec of corresponding maturity for the period Jun-Aug 2025. Note: Compounding frequency varies across instruments. Sources: Government of India; Financial Benchmarks India Pvt. Ltd; and RBI staff estimates. per cent of total deposits have also declined in IV.4 Conclusion the current easing cycle (Chart IV.38.c). Banks are System liquidity remained in surplus during H1 generally prompt in reducing their savings deposit on the back of Reserve Bank’s liquidity augmenting rates in an easing cycle. Large surplus liquidity amidst measures and increase in government spending. moderation in credit demand enabled banks to Domestic financial markets remained resilient amidst transmit rate cuts faster to their liability side, which increased volatility in global financial markets induced helped them to manage their margins effectively by trade and geopolitical uncertainties. Money market (Chart IV.38.d). rates moved in tandem with the policy repo rate. Long term bond yields eased at the beginning of the year The Government of India reviewed the interest but hardened from June onwards amidst domestic rates on various small savings instruments, which developments and global cues. Indian equity markets are linked to secondary market yields on G-secs of demonstrated resilience and generally maintained an comparable maturities and kept them unchanged for upward trajectory with intermittent corrections. The Q3:2025-26. This led to a widening of gap between INR remained range-bound in Q1 but came under the interest rates on most small saving instruments depreciating pressures in Q2. The credit market and their formula-based rates (Table IV.13). The registered robust transmission with lending and widening gaps may be limiting the transmission of deposits rates declining faster in the current easing policy rates to banks’ deposit rates, especially in an cycle. Going forward, the Reserve Bank will remain easing cycle, because of the potential substitution agile and nimble in liquidity management operations effect. A large interest rate differential in favour of to ensure adequate liquidity in the system to meet small savings could lead to a migration of deposits the productive requirements of the economy while away from banks. safeguarding financial stability. 102 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 V. External Environment investor confidence, and shifting expectations about the rate cut by the Federal Reserve. Global growth remains below its long-term average V.1 Global Economic Conditions and is projected to decelerate in 2025 amid elevated In 2025 so far, global economic activity has uncertainties and higher tariffs. Inflation continues remained resilient. High frequency indicators for to moderate but remains above target for several Q3:2025 point to a tepid manufacturing activity, but economies with recent upticks observed in some advanced services sector remain buoyant. Monetary easing economies. Central banks remain cautious in and other policy support in some economies could normalising monetary policy as they assess the unfolding support global growth during the rest of H2. Trade impact of tariffs. Financial markets stay volatile deals struck during the year so far have lowered responding to shifting policy signals, even as equities trade policy uncertainty but it remains elevated. In rebounded strongly. Trade policy uncertainty, its World Economic Outlook update of July 2025, geoeconomic fragmentation, lingering geopolitical risks, the International Monetary Fund (IMF) revised up stretched equity valuations, rising fiscal concerns and its global growth projections to 3.0 per cent from 2.8 inflation persistence pose downside risks to the global per cent for 2025, and to 3.1 per cent from 3.0 per growth outlook. cent for 2026. EMEs face several challenges ranging The global economy, growing below its long-term from weaker global growth, trade policy uncertainty average, is projected to slow in 2025. The near-term to climate-related disruptions which could adversely growth outlook is clouded by trade policy uncertainty, affect their economic prospects. geoeconomic fragmentation, geopolitical risks, and Among AEs, the US economy has remained financial market volatility. The recent uptick in resilient despite some fragility in its labour market. inflation, particularly in advanced economies (AEs), Real GDP grew by 3.8 per cent [quarter-on-quarter coupled with unfolding impact of high tariffs has seasonally adjusted annualized rate (q-o-q, saar)] impeded the disinflation process, posing risks to in Q2:2025, rebounding from the contraction of price stability. Consequently, central banks have 0.6 per cent in the first quarter (Table V.1). The adopted a cautious approach in their policy decisions growth in Q2 was propelled by lower net imports carefully weighing incoming data. Global financial and strong consumer spending, partially offset by markets remained volatile, reflecting shifting risk decline in investment. Labour market showed signs perceptions amid elevated trade policy uncertainty. of weakness as additions to non-farm payrolls in Equity markets scaled new highs driven by tech August were underwhelming. The unemployment stocks. Short-term bond yields generally softened in rate also edged up to 4.3 per cent, but remained low. anticipation of rate cuts. Long-term yields have risen In August, the US Composite Purchasing Managers in AEs on fiscal concerns but declined in emerging Index (PMI) remained robust supported by a buoyant market economies (EMEs), as investors seeking services sector and recovery in manufacturing portfolio diversification show renewed interest in activity. Consumer sentiment, as measured by the EME assets. The US dollar has weakened, reflecting University of Michigan survey, retreated in August trade policy uncertainty, fiscal imbalances, fragile on inflation fears even as readings remained above RBI Bulletin October 2025 103OCTOBER 2025 Monetary Policy Report April-May 2025 levels. Going forward, economic Table V.1: Real GDP Growth (Per cent) activity will depend largely on how well the US absorbs tariff related pass-throughs and the course Country Q3- Q4- Q1- Q2- 2024 2025 2026 2024 2024 2025 2025 (P) (P) of monetary policy. Quarter-on-quarter, seasonally adjusted, annualised rate (q-o-q, saar) Japan’s GDP grew by 2.2 per cent (q-o-q, saar) in Canada 2.4 2.1 2.0 -1.6 Q2:2025, driven by consumer spending amid tariff Euro area 1.6 1.6 2.3 0.5 headwinds and political uncertainty. The Composite Japan 2.3 2.1 0.3 2.2 PMI at 52.0 in August showed buoyant private sector South Korea 0.4 0.3 -0.9 2.7 activity, albeit driven by services. High inflation, UK 0.0 0.4 3.0 1.4 weaker exports and a volatile currency remain key US 3.3 1.9 -0.6 3.8 challenges for the economy. (Year-on-year) Advanced Economies Real GDP growth in the Euro area decelerated in Canada 1.9 2.3 2.3 1.2 1.6 1.6 1.9 Q2 to 0.5 per cent (q-o-q, saar) from 2.3 per cent in Q1, Euro area 0.9 1.3 1.6 1.5 0.9 1.0 1.2 marking the weakest quarter since Q4:2023 as GDP Japan 0.8 1.2 1.7 1.7 0.2 0.7 0.5 contracted in Germany and Italy. Labour markets, South Korea 1.4 1.1 0.0 0.6 2.0 0.8 1.8 however, stayed resilient with unemployment steady UK 1.2 1.5 1.3 1.2 1.1 1.2 1.4 at around 6.2 per cent. The Composite PMI stayed US 2.8 2.4 2.0 2.1 2.8 1.9 2.0 in expansion zone, driven by services. Looking Emerging Market Economies ahead, higher defence and infrastructure spending, Brazil 4.1 3.6 2.9 2.2 3.4 2.3 2.1 accompanied by easing of inflationary pressures, China 4.6 5.4 5.4 5.2 5.0 4.8 4.2 should support growth. India 5.6 6.4 7.4 7.8 6.5 6.4 6.4 GDP growth in the UK moderated to 1.4 per cent Indonesia 5.0 5.0 4.9 5.1 5.0 4.8 4.8 (q-o-q, saar) in Q2:2025 from 3.0 per cent in Q1, due Philippines 5.2 5.3 5.4 5.5 5.7 5.5 5.9 to a weak production sector. The unemployment rate Russia 3.3 4.5 1.4 1.1 4.3 0.9 1.0 at 4.7 per cent in Q2 remained at a four-year high. South Africa 0.4 0.8 0.8 0.6 0.5 1.0 1.3 The UK Composite PMI at 53.5 in August indicated Thailand 3.0 3.3 3.2 2.8 2.5 2.0 1.7 resilient private sector activity as services sector Memo: remained a pillar of strength amidst conclusion of World 2024 2025 (P) 2026 (P) US-UK trade deal. Elevated levels of services inflation Year-on-year and persistent softness in manufacturing, however, Output 3.3 3.0 3.1 remain a cause of concern. Trade volume 3.5 2.6 1.9 Amongst major EMEs, some have shown signs P: Projection Notes: 1. India’s data correspond to fiscal year (April-March); e.g., 2025 of weakness including Brazil and Russia as elevated pertains to April 2025-March 2026. tariffs are likely to have an adverse impact on growth. 2. Projections for 2025 and 2026 are taken from the IMF WEO, July 2025 update. The Chinese economy, however, remained resilient, Sources: Official statistical agencies; Bloomberg; International expanding by 5.2 per cent year-on-year (y-o-y) in Q2, Monetary Fund World Economic Outlook Update, July 2025 and RBI staff estimates. marking a slight slowdown from 5.4 per cent in 104 RBI Bulletin October 2025Monetary Policy Report OCTOBER 2025 Q1. The property sector woes continue to weigh on quarter. Business confidence in Russia weakened in growth momentum. Property investments plunged, August, as manufacturing activity remained tepid as while retail sales and industrial output remained indicated by the PMI. sluggish in Q3. China's exports remained resilient The ASEAN economies are navigating a as shipments to ASEAN1 increased in the wake of challenging landscape. The Asian Development tariffs. Policymakers undertook both fiscal and Bank in July revised down Southeast Asia's growth monetary measures to bolster economic activity. projections to 4.2 per cent from 4.7 per cent for 2025; Deflation, a languishing property sector, subdued for 2026 it was revised down to 4.3 per cent from 4.7 consumer expenditure and trade policy uncertainty per cent. Growth in BRICS2 economies, except India, pose downside risks to China’s growth prospects is likely to remain subdued as these economies during the rest of H2. grapple with multiple domestic headwinds as alluded to earlier (Table V.2). A challenging external Brazil’s GDP growth decelerated to 2.2 per cent environment might aggravate country-specific risks. (y-o-y) in Q2:2025 from 2.9 per cent in Q1 due to moderation in domestic spending and investment. Turning to high frequency indicators, the The labour market, however, remained tight as Organisation for Economic Co-operation and the unemployment rate continued to fall, reaching Development’s composite leading indicator showed 5.6 per cent in the quarter ending July. Private that most economies remained above the long-term sector activity remained weak in Q2 and Q3 (up to trend during Q3:2025 (up to August) (Chart V.1a). August) as indicated by the Composite PMI. Political The Global Composite PMI remained in expansion uncertainty ahead of the 2026 elections and weather- zone during April – August 2025, with services related events pose further downside risks to Brazil’s being the main driver of growth (Chart V.1b). Global growth amidst a challenging external environment. Manufacturing PMI, however, remained in the Economic recovery in South Africa remained fragile contraction zone in April and May before expanding as its GDP grew by 0.6 per cent (y-o-y) in Q2:2025, marginally in June and again in August. down from 0.8 per cent in the previous quarter, The US tariff announcements since April due to slower gross fixed capital formation. Both 2025 and the subsequent bilateral trade deals consumer confidence and business confidence in Q2 have introduced far-reaching shifts in global trade reflected overall pessimism, along with labour market dynamics, posing significant risks to the free flow pressures that have remained acute during the year of goods across the globe. Despite these jolts to so far, with the unemployment rate edging up in international trade, global merchandise trade volume Q2. The Composite PMI showed modest expansion grew for six consecutive quarters up to Q2:2025, and in private sector activity in Q3 (up to August). In it continued to grow in Q3:2025 (July 2025), with Russia, growth led by defence spending has been faster growth in 2025 so far. The growth, however, cooling off, with its GDP growing by 1.1 per cent in hides the weakness in trade as it was primarily driven Q2:2025, slowing from 1.4 per cent in the previous by front-loading before the US tariff hikes came into 1 Association of Southeast Asian Nations (ASEAN) includes Brunei, 2 The BRICS includes group of 10 countries - Brazil, China, Egypt, Ethiopia, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, India, Indonesia, Iran, Russian Federation, South Africa, and United Arab Thailand, and Vietnam. Emirates. RBI Bulletin October 2025 105OCTOBER 2025 Monetary Policy Report Table V.2: Select Macroeconomic Indicators for BRICS Real GDP growth rate Country 2024 2025(P) 2026(P) General Government Country 2024 2025(P) 2026(P) (y-o-y, per cent) gross debt Brazil 3.4 2.3 2.1 Brazil 87.3 92.0 96.0 (per cent of GDP) Russia 4.3 0.9 1.0 Russia 20.3 21.4 22.5 India 6.5 6.4 6.4 India 81.3 80.4 79.6 China 5.0 4.8 4.2 China 88.3 96.3 102.3 South Africa 0.5 1.0 1.3 South Africa 76.4 79.6 81.7 CPI inflation rate Country 2024 2025(P) 2026(P) Current account Country 2024 2025(P) 2026(P) (y-o-y, per cent) balance (per cent of Brazil 4.4 5.3 4.3 Brazil -2.8 -2.3 -2.2 GDP) Russia 8.4 9.3 5.5 Russia 2.9 1.9 1.8 India 4.6 4.2 4.1 India -0.6 -0.9 -1.4 China 0.2 0.0 0.6 China 2.3 1.9 1.7 South Africa 4.4 3.8 4.5 South Africa -0.6 -1.2 -1.4 General Government Country 2024 2025(P) 2026(P) Forex reserves* Country 2023 2024 2025 net lending/borrowing (in US$ billion) Brazil -6.6 -8.5 -7.7 Brazil 355.0 329.7 350.8 (per cent of GDP) Russia -2.2 -1.0 -1.2 Russia 598.6 609.1 689.5 India -7.4 -6.9 -7.2 India 622.5 635.7 702.6 China -7.3 -8.6 -8.5 China 3449.7 3455.6 3602.1 South Africa -6.1 -6.6 -6.1 South Africa 62.5 65.5 69.2 P: Projection *: Forex reserves for 2025 pertain to July for all countries except for Brazil and Russia (August 2025) and India (September 19). Notes: 1. India’s data correspond to fiscal year (April-March) except data on forex reserves which are as per calendar year. 2. Projections for 2025 and 2026 are taken from the IMF WEO, July 2025 update. Sources: Official statistical agencies; World Economic Outlook April 2025 database and July 2025 Update, IMF; International Reserve and Foreign Currency Liquidity (IRFCL), IMF; and RBI. effect (Chart V.2a). The emerging market economies the global ocean freight container pricing index that were the major drivers of growth in Q2 and Q3 measures 40-feet container prices – trended below (up to July 2025). The Freightos Baltic Global Index – the 2024 average during most of 2025 (Chart V.2b). Chart V.1: Survey Indicators a. OECD Composite Leading Indicators b. Composite PMI (Index) (Index) 102 101.6 101.2 101 100.8 100.4 100 99.7 99 US UK Germany US UK Global China India China (Caixin) Euro area Sources: Organisation for Economic Co-operation and Development (OECD); and Bloomberg. 106 RBI Bulletin October 2025 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 52-luJ 52-guA 56 54.6 54 53.5 52.9 52 51.9 51.0 50 48 46 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 52-luJ 52-guAMonetary Policy Report OCTOBER 2025 Chart V.2: World Trade Volume a. World Trade Volume: Relative Contribution b. World Trade Volume and Freightos Baltic Global Index (Percentage point) (Per cent, left scale; Index, right scale) 6.0 5.4 6500 5.0 7.0 4.0 2.9 5.4 5500 3.0 4.0 4500 2.0 1.0 2.4 1.3 3500 1.0 0.0 2500 -1.0 -2.0 -2.0 2072.1 1500 -3.0 -4.0 -5.0 500 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Jul 2022 2023 2024 2025 AEs EMEs World trade growth (y-o-y) World trade (m-o-m) World trade growth (per cent, y-o-y) Freightos Baltic Global Index (RHS) Sources: CPB Netherlands; Refinitiv Eikon; and RBI staff estimates. The World Trade Organisation’s latest Goods Trade commodity prices, particularly in energy and metals. Barometer for June 2025 indicates that strong trade Prices softened in July as energy and industrial metal volume growth witnessed before the implementation prices declined due to oversupply and weak demand. of higher US tariffs might slow down during the Commodity prices rose in August and September rest of 2025. In August 2025, the World Trade driven by precious metals on safe haven demand Organisation projected world merchandise trade to amid elevated uncertainty (Chart V.3a). According to grow by 0.9 per cent in 2025, an improvement from the Food and Agriculture Organization, global food the 0.2 per cent contraction estimated in April 2025, prices firmed up modestly in Q2, primarily due to mainly reflecting front-loading of imports in the US. rise in dairy and meat prices, partially offset by the It, however, revised down the growth projection for fall in sugar and cereal prices. Food prices edged up 2026 to 1.8 per cent from the previous estimate of in Q3 (up to August) as gains in meat and vegetable 2.5 per cent. oil prices outweighed declines in cereals and sugar V.2 Commodity Prices and Inflation (Chart V.3b). Global commodity prices exhibited volatility Crude oil prices have generally remained in Q2, on account of geopolitical tensions and subdued since April 2025 on the OPEC+ decision to uncertainty surrounding US tariffs. As measured by raise production. The OPEC+ reversed its previous the Bloomberg Commodity Price Index, commodity strategy of production cuts, opting instead to prices fell in April mainly due to a decline in energy and phase out 2.2 million barrels per day of voluntary base metal prices reflecting a bleak demand outlook. output reductions. Oil prices firmed up in June The fall continued in May led by lower agricultural and July as geopolitical risks rose, driving up prices. In June, announcements of new US tariffs prices before the de-escalation of conflict between increased global uncertainty, engendering spike in Iran and Israel led to a softening of prices in Q2. RBI Bulletin October 2025 107 32-rpA 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 52-guAOCTOBER 2025 Monetary Policy Report Chart V.3: Commodity Prices a. Bloomberg Commodity Price Index b. Food Price Indices [Index (end-2023 = 100)] [Index (2014-16=100)] 170 160 150 152.6 140 130.1 130 128.0 120 110 105.6 100 Sources: Food and Agriculture Organisation; World Bank; Bloomberg; and Petroleum Planning and Analysis Cell, Ministry of Petroleum & Natural Gas, Government of India. Oil prices remained range-bound in Q3 amid Consumer Price Inflation ample supply and weak global growth outlook Global consumer price inflation continued to (Chart V.3c). moderate gradually, though at an uneven pace. While Metal prices exhibited a mixed trend in Q2, disinflation slowed in AEs, it continued in EMEs influenced by fluctuating demand-supply dynamics with China facing deflation. Persistent tightness in in China and global economic conditions, including labour markets kept underlying inflation elevated US trade policies. Base metal prices remained in many economies, though softening commodity subdued in Q3 due to weak demand from China. As prices contained the rise. Headline inflation remains per the World Gold Council data, the demand for gold above central bank targets in several countries as surged to 1249 tonnes in Q2, a 3.0 per cent (y-o-y) well as above their pre-pandemic levels. As per IMF’s rise, fuelled by strong investment demand – mainly World Economic Outlook (July 2025 update), global into exchange traded funds (ETFs) – due to safe-haven headline inflation is projected at 4.2 per cent for 2025 demand amidst global uncertainties. Globally, central banks added 166 tonnes of gold to official reserves and 3.6 per cent for 2026 (Table V.3). Accordingly, further boosting its demand. Gold prices remained central banks in AEs remain focused on ensuring elevated in Q3, surging to all time high in September that inflation returns to target, while considering (Chart V.3d). risks to output and employment. Many EMEs are 108 RBI Bulletin October 2025 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 52-luJ 52-guA Food Meat Cereals Dairy c. Energy and Crude Oil Prices d. Metal Price Indices (US$ per bbl, left scale; Index, right scale) (Index (end-2023=100), left scale; (Index (end-2023=100), right scale) 90 130 85 120 110 80 96.3 100 75 88.1 90 70 69 8. 01 68.2 65 70 60 60 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 52-luJ 52-guA 185 125 18 11 7.8 0 119.8 115 155 113.0 1101.490 105 125 95 110 85 95 Brent Crude Oil Indian basket Energy Price Index (RHS) Natural Gas index (RHS) Copper Aluminium Zinc Gold (RHS) 42-naJ-5 42-beF-9 42-raM-51 42-rpA-91 42-yaM-42 42-nuJ-82 42-guA-2 42-peS-6 42-tcO-11 42-voN-51 42-ceD-02 52-naJ-42 52-beF-82 52-rpA-4 52-yaM-9 52-nuJ-31 52-luJ-81 52-guA-22 52-peS-62 110 108 106 105.1 104 102 100 98 96 94 92 90 42-naJ-50 42-beF-90 42-raM-51 42-rpA-91 42-yaM-42 42-nuJ-82 42-guA-20 42-peS-60 42-tcO-11 42-voN-51 42-ceD-02 52-naJ-42 52-beF-82 52-rpA-40 52-yaM-90 52-nuJ-31 52-luJ-81 52-guA-22 52-peS-62Monetary Policy Report OCTOBER 2025 pursuing monetary easing to support growth amidst Inflation in EMEs has been broadly moderating easing inflation pressures. since the April MPR. The risk of deflation is evident across several Asian economies, driven by In the US, the disinflation process slowed as both a combination of subdued demand, sluggish wage headline and core inflation witnessed an uptick in growth and excess supply. Q2 and Q3 with elevated shelter costs. The headline In Brazil, inflation moderated from 5.5 per cent CPI and core inflation (y-o-y) rose to 2.9 per cent in March to 5.1 per cent in August, driven by lower and 3.1 per cent, respectively, in August up from 2.4 inflation in transport, and falling food prices, amidst per cent and 2.8 per cent in March 2025, marking high interest rates (Chart V.4c). Core inflation in the highest levels since February. The recent uptick Brazil, however, picked up from 4.9 per cent in March partly reflects the impact of tariffs and their pass- to 5.4 per cent during June-August (Chart V.4d). South through to core components. Inflation, measured by the personal consumption expenditure (PCE) price Table V.3: Consumer Price Inflation index — the Federal Reserve’s preferred inflation (Y-o-y, Per cent) metric — also witnessed a similar uptick, rising from Country Inflation Q3: Q4: Q1: Q2: Jul - Aug - 2.4 per cent in March to 2.7 per cent in August (Chart Target 2024 2024 2025 2025 25 25 V.4a). Core PCE inflation registered an increase from Advanced Economies Canada 2.0 ± 1.0 2.0 1.9 2.3 1.8 1.7 1.9 2.7 per cent in March to 2.9 per cent in August (Chart Euro area 2.0 2.2 2.2 2.3 2.0 2.0 2.0 V.4b). Japan 2.0 2.8 2.9 3.8 3.5 3.1 2.7 In the UK, headline inflation rose to 3.8 per cent South Korea 2.0 2.1 1.6 2.1 2.1 2.1 1.7 in August from 2.6 per cent in March 2025, reaching United Kingdom 2.0 2.0 2.5 2.8 3.5 3.8 3.8 the highest level since January 2024 due to elevated CPI - 2.6 2.7 2.7 2.5 2.7 2.9 United services inflation. Core inflation also remained States PCE 2.0 2.4 2.6 2.6 2.5 2.6 2.7 elevated. Emerging Market Economies In the Euro area, headline inflation marginally Brazil 3.0 ± 1.5 4.4 4.8 5.0 5.4 5.2 5.1 declined from 2.2 per cent in March to 2.0 per cent Russia 4.0 8.9 9.0 10.1 9.8 8.8 8.1 India 4.0 ± 2.0 4.2 5.6 3.7 2.7 1.6 2.1 in August, aligning with the European Central Bank’s China 2.0 0.5 0.2 -0.1 0.0 0.0 -0.4 target of 2.0 per cent. Inflation in the Euro area was South Africa 3.0 - 6.0 4.3 2.9 3.0 2.9 3.5 3.3 driven by food and services, partially offset by weak Mexico 3.0 ± 1.0 5.0 4.5 3.7 4.2 3.5 3.6 energy prices. Core inflation (excluding energy, Indonesia 2.5 ± 1.0 2.0 1.6 0.6 1.8 2.4 2.3 food, alcohol, and tobacco) remained steady at 2.3 Philippines 3.0 ± 1.0 3.2 2.6 2.3 1.4 0.9 1.5 per cent since May, after moderating from 2.7 per Thailand 1.0 - 3.0 0.6 1.0 1.1 -0.3 -0.7 -0.8 cent in April. In Japan, CPI inflation excluding fresh Turkey 5.0 ± 2.0 54.4 46.7 39.8 36.1 33.5 33.0 food — the Bank of Japan's prefered inflation metric Memo: — declined from 3.2 per cent in March to 2.7 per 2023 2024 2025 2026 cent in August. Headline CPI inflation decelerated (P) (P) to 2.7 per cent in August from 3.6 per cent in World consumer price inflation 6.6 5.6 4.2 3.6 March, primarily due to subdued electricity prices P: Projection Note: Inflation target for China is around 2.0 per cent for 2025 (Chart V.4b). Sources: Central bank websites; IMF; and Bloomberg. RBI Bulletin October 2025 109OCTOBER 2025 Monetary Policy Report Africa saw a rise in headline inflation from 2.7 per contrast, disinflation is continuing in EMEs (Chart cent to 3.3 per cent over the same period, whereas V.5a & b). core inflation remained steady at around 3.0 per cent V.3 Monetary Policy Stance during March-August. In Russia, headline inflation moderated from 10.3 per cent in March to 8.1 per cent During Q2 and Q3, central banks adopted in August. Inflation, however, remains elevated and divergent monetary policy paths, driven by their well above the target of 4.0 per cent. domestic growth-inflation dynamics and other macroeconomic developments amidst rising global China remained in deflation during February-May tariffs. Continued disinflation in some major EMEs before registering a meagre price rise of 0.1 per cent and a soft US dollar has provided EMEs with space in June and no change in the consumer price index in for monetary easing. July. However, prices fell again by 0.4 per cent largely due to lower food prices. The core inflation broadly The Federal Reserve maintained a pause on remained steady across EMEs. its target range for the federal funds rate in all the Since the April 2025 MPR, the final phase of meetings during January – July. In September, the disinflation has been prolonged with a noticeable Federal Open Market Committee lowered the range slowdown in disinflation process in major AEs. In by 25 basis points (bps) to 4.00-4.25 per cent in Chart V.4: CPI Inflation (y-o-y) – Select Economies a. Advanced Economies - Headline b. Advanced Economies - Core (Per cent) (Per cent) US (PCE) Euro area Target UK Japan US (PCE) UK Euro area Japan c. Emerging Market Economies - Headline d. Emerging Market Economies - Core (Per cent) (Per cent) 9.0 8.1 7.0 5.0 5.1 3.0 3.3 2.1 1.0 -1.0 -0.4 Brazil Russia China Brazil Russia China South Africa India South Africa India 110 RBI Bulletin October 2025 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 52-luJ 52-guA 5.0 4.5 4.0 3.8 3.5 3.0 2.7 2.5 2.7 2.0 2.0 1.5 1.0 9.0 8.0 7.0 5.0 5.4 3.0 4.2 3.1 1.0 0.9 -1.0 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 52-luJ 52-guA 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 52-luJ 52-guA 5.0 4.5 4.0 3.5 3.6 3.3 3.0 2.9 2.5 2.3 2.0 1.5 1.0 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 52-luJ 52-guA Notes: 1. For India, core CPI, i.e., CPI excluding food and fuel is worked out by eliminating the groups 'food and beverages' and 'fuel and light' from the headline CPI. 2. Chart V.4b refers to CPI inflation in all items less fresh food and energy. Sources: Official statistical agencies; Bloomberg; and RBI staff estimates.Monetary Policy Report OCTOBER 2025 view of rise in downside risks to employment. The inflationary pressures. The European Central Bank Committee also stated that in considering additional continued with the easing cycle, lowering its key rates adjustments to the target range for the federal funds by 25 bps each in April and June 2025 meetings. In Q3, rate, it would carefully assess incoming data, the the bank kept the rates unchanged. The Bank of Japan evolving outlook, and the balance of risks. As per the maintained status quo over the last five meetings, summary of economic projections released in the after hiking by 25 bps in January 2025 (Chart V.6a). September 2025, the Committee expected the target Among other AEs, Australia reduced its policy rate range for the federal funds rate to be at 3.50-3.75 per in May and August as inflation eased. Canada reduced cent by the end of 2025, indicating two more rate its policy rate by 25 bps in September considering a cuts of 25 bps each. In September 2025, the Federal weaker economy and less upside risk to inflation. New Reserve revised its monetary policy framework. The Zealand lowered its policy rate by 75 bps during April- revised framework removed effective lower bound August 2025 on benign inflation outlook. Norway as a defining feature of the framework, returned to undertook a cautious easing of monetary policy, flexible inflation targeting by abandoning average cuting rate by 50 bps during 2025 as inflation evolved inflation targeting and de-emphasised the 'shortfall' as projected and unemployment increased somewhat. from the maximum employment. South Korea and Switzerland each have delivered rate The Bank of England reduced its policy rate by 25 cut of 25 bps since April whereas Sweden reduced the bps each in May and August 2025 to support economic benchmark rate by 50 bps during the same period. activity amidst flagging growth in the second quarter Israel has kept the policy rate unchanged since and uncertainty surrounding the global trade order February 2024. Elevated uncertainty surrounding despite the successful conclusion of a trade deal with global trade negotiations has made central banks the US. The Bank of England, however, maintained cautious, complicating decisions on rate cut. Futures status quo in September in view of renewed and Overnight Index Swap (OIS) markets, however, Chart V.5: Last Mile of Disinflation a. Advanced Economies b. Emerging Market Economies (Per cent) (Per cent) 0.7 Japan 1.2 -1.9 India -0.7 0.0 Euro 0.2 -1.2 South Africa -1.8 UK 1.8 0.6 Russia 4.1 6.3 US 0.4 0.7 Brazil 2.1 2.5 0.0 0.5 1.0 1.5 -3 0 3 6 August 2025 Inflation Deviation from Target August 2025 Inflation Deviation from Target March 2025 Inflation Deviation from Target March 2025 Inflation Deviation from Target Note: For Brazil, India, and South Africa the target is taken as the midpoint of their inflation control target range. Sources: Bloomberg; and RBI staff estimates. RBI Bulletin October 2025 111OCTOBER 2025 Monetary Policy Report Chart V.6: Policy Rate Changes – Select Major Economies a. Advanced Economies b. Emerging Market Economies (Basis points) (Basis points) 50 50 -50 -50 -75 -100 -150 -125 -125 -175 -200 -250 -225 -250 -250 -350 -325 Source: Bloomberg 3 The Chinese authorities intensified policy support through targeted fiscal measures to bolster consumers spending. 112 RBI Bulletin October 2025 SU KU aera oruE napaJ adanaC nedewS yawroN cilbupeR hcezC ailartsuA dnalaeZ weN dnalecI aeroK htuoS 325 450 100 300 150 0 -150 -45 -100 -125 -150 -125 -300 -250 -450 -375 -350 -425 -375 lizarB aissuR aidnI anihC acirfA htuoS ocixeM elihC yragnuH senippilihP aibmoloC aisenodnI ureP H1:2024 H2:2024 Q1:2025 H1:2024 H2:2024 Q1:2025 Q2:2025 Q3:2025 (upto Sep 26, 2025) Q2:2025 Q3:2025 (upto Sep 26, 2025) Chart V.7: Market Implied Path of Policy Rates (Per cent) 4.5 4.0 3.64 3.5 3.27 3.24 3.0 2.5 2.0 1.85 1.5 US UK Euro area Australia Notes: 1. The chart is as on Sep 26, 2025. 2. Market implied policy rates are overnight indexed swap rates for US, UK, Australia, and Euro area. Source: Bloomberg 52-luJ 52-guA 52-peS 52-tcO 52-voN 52-ceD 62-naJ 62-beF 62-raM 62-rpA 62-yaM 62-nuJ 62-luJ are pricing in lower policy rates in major AEs going uncertainty, as the economy remained resilient forward (Chart V.7). with subdued inflation. It, however, kept the policy Monetary policy in EMEs remained broadly rate unchanged at 2.75 per cent in its September supportive of growth as inflation pressures eased, with meeting. Indonesia eased rates by 100 bps during Brazil being a notable exception. Among the BRICS, May-September to support growth and stabilize its Brazil raised its policy rate by a total of 275 bps to 15.0 currency amid declining inflation. The Philippines per cent during January – June 2025 before pausing lowered rates in April, June and August as inflation in July and September, as inflationary pressures remained persistent. On the contrary, Russia has reduced interest rate cumulatively by 400 bps during 2025 so far. China reduced its loan prime rates by 10 bps in May but left them unchanged thereafter as the economy remained resilient, adopting a wait-and- watch approach. In this regard, China has preferred structural support over repeated rate cuts.3 South Africa reduced rates by 25 bps each in May and July amid concerns over weak growth and moderation of inflation expectations. In Asia, Malaysia cut its policy rate by 25 bps in July – the first reduction in five years – citing tradeMonetary Policy Report OCTOBER 2025 fell to a multi-year low. Thailand cut the interest fiscal sustainability worries, trade policy uncertainty, rate in April and August by 25 bps each to combat and concerns over autonomy of institutions, while deflation. In Latin America, monetary policy was most EME currencies strengthened. broadly accommodative with Mexico leading rate Global equity markets fell sharply in April cuts among its peers. Many Latin American central after the announcement of reciprocal tariffs by banks have been frontrunning the Fed, as a softer the US. Markets rebounded subsequently as the US dollar provided additional policy space to support implementation of tariffs was postponed and growth. Mexico extended its easing cycle with a 150 bilateral trade deals were signed. As measured by the bps rate cut between May and September. Colombia MSCI World Index, equity markets gained by 18.1 maintained a pause after a 25 bps rate cut in April. per cent during April - September 2025, reflecting Chile cut its rate by 25 bps in July amid global trade gains in both AEs and EMEs (Chart V.8a). Among AEs, policy uncertainty, marking the first cut in 2025. Peru S&P 500 in the US exhibited heightened volatility in cut the policy rate by 25 bps in May and September April due to higher policy uncertainty (Chart V.9b). each. Among the key European EMEs, Hungary kept The subsequent easing of trade tensions, however, rates unchanged through 2025, whereas Poland eased spurred a sharp rebound in equity markets. The intermittently, by cutting its policy rate by a total of upward trajectory continued in rest of Q2, supported 100 bps in 2025 so far (Chart V.6b). by the US-China trade deal amid intermittent bout V.4 Global Financial Markets of volatility stemming from the Israel-Iran conflict. Later, increased bets on rate cuts by the Fed Notwithstanding divergent trends in the real (Chart V.9a) and strong performance by technology economy, financial markets remain buoyant across companies further drove the index to record levels in countries with bouts of volatility amidst uncertainty August and September. Valuations in equity markets, around trade policy, the Federal Reserve’s rate however, remain stretched. Overall, the S&P 500 decisions and geopolitical tensions. After a sharp fall Index rose by 18.4 per cent from April to September. in April, global financial markets rebounded strongly through Q2 and Q3, driven by a reassessment of tariff European stocks began Q2 on a tumultuous risks to be less severe than initially anticipated. Equity note as announcements of steep tariffs led to selling markets surged to record highs in many economies, pressures. They ended the quarter on a subdued supported by optimism surrounding de-escalation of note as lingering trade uncertainty and a strong euro the tariff war and an easing of geopolitical tensions. triggered risk-off sentiment. In Q3, european stock Enthusiasm over artificial intelligence drove strong markets performed better than in Q2, boosted by the gains in technology stocks. Government bond yields trade deal towards end-July and a steady inflation in many AEs rose, reflecting rising concerns about print. European equities, however, remained the debt sustainability. Tariff-induced inflation underwhelming compared to its peers due to weak pressures also kept monetary policy restrictive, second-quarter corporate earnings and downgrading exerting additional upward pressure on yields. In of France’s sovereign credit score by Fitch amid contrast, yields softened in many EMEs, as investors political uncertainty (Chart V.8b). The UK’s stock rebalanced portfolios away from traditional safe- indices performed better than European markets, haven assets towards higher-yielding EME securities. supported by its improving economy and the Bank The US dollar depreciated sharply since April, on of England’s rate cuts. It helped the Financial Times RBI Bulletin October 2025 113OCTOBER 2025 Monetary Policy Report Chart V.9: Sources of Uncertainty: Monetary and Economic Policy a. Probability of Rate cut for the Federal b. US Uncertainty Indicators Reserve December Meeting (Index, left scale;Index, right scale) (Per cent) 8,000 550 7,000 6,000 450 5,000 350 4,000 306.9 3,000 250 2684.9 2,000 150 1,000 0 50 Trade Policy Uncertainty Index Baseline 1 Cut 2 Cuts Economic Policy Uncertainty Index (RHS) Note: In chart 9a, baseline refers to no change in policy rate of the US while the pace of rate cut is assumed to be 25 bps. Sources: Bloomberg; and CME FedWatch. 114 RBI Bulletin October 2025 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 52-luJ 52-guA 80.0 70.0 60.0 65.4 50.0 40.0 31.5 30.0 20.0 10.0 3.1 0.0 42-voN-01 42-ceD-21 52-naJ-31 52-beF-41 52-raM-81 52-rpA-91 52-yaM-12 52-nuJ-22 52-luJ-42 52-guA-52 52-peS-62 Chart V.8: Equity Markets a. Equity Indices (MSCI) b. Change in Equity Indices [Index (end-2023=100)] (Per cent) Euro area (Euro Stoxx 50) Japan (Nikkei) UK (FTSE) US (S&P 500) Brazil (Ibovespa) India (Sensex) China (SSE Index) South Africa (JSE Index) World AEs EMEs Q2:2025 Q3:2025 (upto Sep 26, 2025) Sources: Bloomberg; and RBI staff estimates. Stock Exchange reach record levels. It scaled new uncertainty made investors cautious. Following heights in Q3 as global investors diversified their the interim agreement, however, Chinese stocks outperformed in Q3, supported by various portfolios. Japanese markets outperformed other AEs government stimulus measures and growth in in both quarters, buoyed by the US–Japan trade deal, tech stocks. Brazil’s equity market gained during a weakening yen, and strong corporate earnings. April-September with occasional pullbacks driven Among EMEs, China’s equity market by shifting global sentiment, political uncertainty underperformed its peers in Q2 as trade deal ahead of the 2026 elections, and soft commodity decnavdA tekram gnigremE seimonoce seimonoce 134.9 135 134.4 130 129.5 125 120 115 110 105 100 95 90 42-naJ-5 42-beF-9 42-raM-51 42-rpA-91 42-yaM-42 42-nuJ-82 42-guA-2 42-peS-6 42-tcO-11 42-voN-51 42-ceD-02 52-naJ-42 52-beF-82 52-rpA-4 52-yaM-9 52-nuJ-31 52-luJ-81 52-guA-22 52-peS-62 1.0 3.7 13.7 12.0 2.1 6.0 10.6 7.1 6.6 4.7 -3.8 8.0 3.3 11.1 8.8 10.7 -4 0 4 8 12Monetary Policy Report OCTOBER 2025 prices. Equity market in India rallied in Q2; however, hardened toward the end of September following the imposition of a 50 per cent US tariff dampened a significant upward revision to GDP numbers and investor sentiment, leading to a 3.8 per cent decline tracking changes in rate cut expectations. UK yields in India’s equity index (BSE Sensex) in Q3 despite hardened in Q3 on fiscal concerns ahead of the autumn budget, diminishing rate-cut expectations, rating upgrade by S&P Global in August. and renewed inflationary pressures. The German Sovereign bond yields across major AEs largely 10-year bund yields also firmed up as spending on declined in Q2, reflecting continued monetary defence and infrastructure was expected to rise, while policy easing. In the UK, 10-year yields fell as the the US–EU trade deal reduced demand for bunds government moved toward shorter-term borrowing as a safe-haven asset. The Japanese government amidst slowing growth. Japanese bond yields also bond yields rose in Q3 amidst political uncertainty declined, as government bond issuance was expected and elevated inflation. The Bank of Japan’s gradual to be trimmed and the Bank of Japan signalled reduction in bond purchases also exerted hardening a more cautious approach to interest rate hikes pressure on yields. considering tariff risks. In contrast, US Treasury In contrast, 10-year sovereign bond yields in yields firmed up due to the introduction of the ‘One many EMEs largely eased since the last MPR, as Big Beautiful Bill’ which raised concerns about fiscal investors diversified away from traditional safe- sustainability and fears of increased bond supply haven assets due to policy uncertainty triggered (Chart V.10a). In the US, yields, particularly the by the US tariffs. At the same time, several EME 30-year, spiked after the passing of the bill by the central banks supported growth by reducing policy Congress and an upward revision of inflation rates. In China, however, government stimulus projections by the FOMC in June. Yields, however, measures and ongoing trade negotiations fueled eased through most of Q3 on rising expectations of risk-on sentiment. As a result, investors shifted to rate cuts, driven by weak employment data. They equity from bonds, leading to rise in yields (Chart Chart V.10: 10-Year Sovereign Bond Yields a. Select AEs b. Select EMEs (Per cent) (Per cent) 5 4.7 4.2 4 3 2.7 2 1.7 1 0 US UK Japan Germany Brazil India China South Africa Source: Bloomberg. RBI Bulletin October 2025 115 42-naJ-50 42-beF-90 42-raM-51 42-rpA-91 42-yaM-42 42-nuJ-82 42-guA-20 42-peS-60 42-tcO-11 42-voN-51 42-ceD-02 52-naJ-42 52-beF-82 52-rpA-40 52-yaM-90 52-nuJ-31 52-luJ-81 52-guA-22 52-peS-62 15 13.7 13 11 9 9.2 7 6.5 5 3 1.9 1 42-naJ-50 42-beF-90 42-raM-51 42-rpA-91 42-yaM-42 42-nuJ-82 42-guA-20 42-peS-60 42-tcO-11 42-voN-51 42-ceD-02 52-naJ-42 52-beF-82 52-rpA-40 52-yaM-90 52-nuJ-31 52-luJ-81 52-guA-22 52-peS-62OCTOBER 2025 Monetary Policy Report V.10b). Globally, US treasury yields exert sizeable EME yields, particularly in medium and long-term and statistically significant spillover effects on maturities (Box V.1). Box V.1: Pass-through of US Treasury Yields to Emerging Market Bond Yields Chart V.1.1: Emerging Markets Yields Movements Index a. 3 Month Yields b. 2 Year Yields c. 10 Year Yields 300 5000 250 800 160 140 4500 700 140 120 250 4000 200 600 120 3500 100 200 3000 150 500 100 80 150 2500 400 80 2000 100 300 60 60 100 1500 200 40 40 1000 50 50 500 100 20 20 0 0 0 0 0 0 Mexico Brazil Mexico Brazil Mexico Brazil India South Africa India South Africa India South Africa US (RHS) US (RHS) US (RHS) Note: Yields have been indexed to Q1 of 2011 Sources: Reuters; and Bloomberg. (Contd.) 4 The EMEs country list here includes Brazil, Colombia, India, Mexico, the Philippines, Poland, Russia, South Africa, and Thailand. For the 30-year tenor, the sample spans Q4:2015 to Q2:2025 for eight countries (excluding Poland), while a 15-year tenor is used for Colombia due to data limitations. 116 RBI Bulletin October 2025 1102:2Q 3102:2Q 5102:2Q 7102:2Q 9102:2Q 1202:2Q 3202:2Q 5202:2Q 1102:2Q 3102:2Q 5102:2Q 7102:2Q 9102:2Q 1202:2Q 3202:2Q 5202:2Q 1102:2Q 3102:2Q 5102:2Q 7102:2Q 9102:2Q 1202:2Q 3202:2Q 5202:2Q The pass-through of US financial conditions to emerging quarterly data spanning Q1:2011 to Q2:20254, with the market economies (EMEs) is a major conduit of global following specification financial spillovers, with movements in US Treasury Y α β r β CPI β FB β US β Ex δ ε yields playing a pivotal role. In fact, US monetary it it it it t it i it policy significantly shapes international bond markets Y: =E M +E b1ond + yi2elds, r+: c3entra +l ba4nk p +o li5cy ra t+e , C +P I: t t t (Albagli et al., 2018), and decline in long-term US yields consumer price inflation (year-on-year), FB: fiscal t boost foreign ownership of EME debt (Moore et al., balance to GDP ratio, US: US bond yields, Ex: change t t 2013). Moreover, US treasury yields are also found in exchange rate (year-on-year) δ: country fixed effect, to have large effects on AEs’ government bond yields i i indexes country, t indexes time, ε : idiosyncratic error (Avalos et al., 2025). Yield movements in EMEs are it term. suggestive of spillover impact from US Treasury yields (Chart V.1.1). The impact of domestic macroeconomic indicators is on expected lines. US treasury yields have the To assess the pass-through of US yields to the short- term (3-month), medium-term (2-year), and long-term strongest spillover impact on 10-year tenor, with (10-year and 30-year) maturities of EMEs, a dynamic noticeable effects on the 2-year and 30-year maturities; panel GMM (Ogaki, 1999) is estimated based on however, the impact on 3-month yields is negligible.Monetary Policy Report OCTOBER 2025 System GMM Results – EMEs Government Bond underscore the sensitivity of EME debt markets to US Yields financial conditions. Variable 3M Yield 2Y Yield 10Y Yield 30Y Yield References: Policy rate 0.943*** 0.196*** 0.115*** 0.069*** Albagli, E., Ceballos, L., Claro, S., & Romero, D. CPI -0.082 0.168*** 0.108*** 0.048 (2018). “Channels of US monetary policy spillovers to Fiscal balance 0.029 -0.036* -0.048*** -0.060** to GDP international bond markets”. BIS Working Papers No US yield 0.610 0.407*** 0.534*** 0.381** 719, 2018. Exchange Rate 0.009 -0.004** -0.010*** 0.001 Moore, J., Nam, S., Suh, M., & Tepper, A. (2013). Constant 0.005 -0.016 -0.028 0.007 Notes: 1. p < 0.01 = ***, p < 0.05 = **, p < 0.1 = * “Estimating the Impacts of U.S. LSAPs on Emerging 2. Presumed exogenous variables are the policy rate and fiscal Market Economies’ Local Currency Bond Markets”. balance. The model specification is consistent with the Hansen J-test of instrument validity. Federal Reserve Bank of New York staff report no. 595, 3. A positive fiscal balance means fiscal surplus and negative 2013. balance means fiscal deficit. Similarly, a positive change in exchange rate means appreciation and negative change means Avalos, F., Todorov, K., & Xia, D. (2025). “US spillovers depreciation. amid macroeconomic divergence”. BIS Quarterly This maturity-specific impact indicates that while Review, March 2025. domestic factors anchor short-term rates, US yields exert greater influence on term premia and long-term Ogaki, M., (1999). “GMM Estimation Techniques”. yields that can reduce the diversification benefits Ch.2 in Generalized Method of Moments Estimation. for international investors. Overall, the findings Cambridge University Press, 1999. In the currency market, the US dollar remained first half of May after depreciating in April, supported subdued, while emerging market currencies gained by the US–China interim trade deal and strong as investors diversified towards emerging market employment data. In the latter half of Q2, however, assets (Chart V.11a). The US dollar rebounded in the the dollar depreciated significantly as investors grew Chart V.11: Currency Movements and Capital Flows a. Currency Indices b. Portfolio Flows to EMEs Index (end-2023=100) (US$ billion) 107 106 105 103 101 99 97 97 95 MSCI EME Currency Index US Dollar Index Debt Equity Total Sources: Bloomberg; Institute of International Finance; and RBI staff estimates. RBI Bulletin October 2025 117 42-naJ-50 42-beF-90 42-raM-51 42-rpA-91 42-yaM-42 42-nuJ-82 42-guA-20 42-peS-60 42-tcO-11 42-voN-51 42-ceD-02 52-naJ-42 52-beF-82 52-rpA-40 52-yaM-90 52-nuJ-31 52-luJ-81 52-guA-22 52-peS-62 12 6 0.2 -4.1 -4.4 -6 -12 -18 -24 42-naJ-5 42-beF-9 42-raM-51 42-rpA-91 42-yaM-42 42-nuJ-82 42-guA-2 42-peS-6 42-tcO-11 42-voN-51 42-ceD-02 52-naJ-42 52-beF-82 52-rpA-4 52-yaM-9 52-nuJ-31 52-luJ-81 52-guA-22 52-peS-62 0OCTOBER 2025 Monetary Policy Report wary of its safe-haven appeal amidst rising public to local developments, including political instability debt concerns. In July, the dollar appreciated on in Indonesia, renewed tariff risks in Latin America, optimism surrounding multiple trade agreements India and weak Chinese economic data. and the de-escalation of conflict between Iran and V.5 Conclusion Israel, easing fears of potential US involvement. The global macroeconomic environment remains The dollar remained volatile in Q3, with changing fraught with considerable risks. The rise in tariffs investor sentiment amid incoming data releases. In has heightened the risk of supply chain disruptions 2025 so far, the US dollar has fallen by 9.5 per cent, as that could impede the ongoing disinflation process unpredictable policy decisions unsettled investors. and constrain the space for monetary policy easing. These movements were mirrored in EME currencies, For emerging market economies, the external exacerbated by swings in capital flows (Chart V.11b). environment poses several challenges including weak The MSCI emerging market currency index rose by global growth, high tariffs, heightened uncertainty, 5.3 per cent in Q2; however, Q3 saw a reversal due volatile capital flows, and geopolitical tensions. 118 RBI Bulletin October 2025SPEECHES Opening Remarks at the High-Level Dialogue on Forging Economic Resilience through Digital Public Platforms Shri Sanjay Malhotra Driving Inclusive and Sustainable Growth Through Digital Public Infrastructure and FinTech Shri Sanjay Malhotra Responsible Artificial Intelligence (AI) – Balancing Innovation with Financial Stability Shri T Rabi Sankar Inclusion is Innovation’s Highest Purpose: Lessons from India Shri Swaminathan J. Transforming Public Sector Banks for a Viksit Bharat Shri Swaminathan J.Opening Remarks at the High-Level Dialogue on Forging Economic SPEECH Resilience through Digital Public Platforms Opening Remarks at the High- private services. Digital Identity, Payments, and Data Exchange form its foundational building blocks. Level Dialogue on Forging The G20 also established a comprehensive Economic Resilience through framework of guiding principles which underpin development and implementation of such platforms Digital Public Platforms* including, inclusivity to ensure universal access, interoperability for seamless system integration, Shri Sanjay Malhotra scalability for large-scale deployment, security and privacy protection. It is a pleasure to welcome all of you to this High-Level Dialogue on Forging Economic Resilience II. Why Digital Public Platforms matter for central bankers – Economic Resilience as the driving force through Digital Public Platforms (DPPs). Digital Public Platforms are of immense Thank you for accepting our invitation to be a importance for Central Banks. part of this dialogue. As key decision makers of your esteemed institutions, entrusted with safeguarding Central Banks not only serve as the ultimate the economic heath and resilience of your respective guardians of economic resilience. They in many countries, are also responsible for enhancing financial economies, your presence amidst us today adds great inclusion and for operating and regulating critical value to this occasion. payment and settlement infrastructure that form the I expect an enriching and fruitful discussion on backbone of modern economies. today’s topic. It is of critical importance, as it has the Digital Public Platforms are an effective tool for potential to significantly enhance the economic well- achieving these objectives. They collectively lower being of our people. barriers to inclusion and facilitate access to financial India is an excellent example of how digital services. As a result, globally, around 865 million public platforms (DPPs) can impart tangible economic individuals opened their first account with financial benefits and materially improve the lives of our institutions enabling quicker and hassle-free receipt citizens. of governmental grants and subvention2. Development of fast payments systems (FPS) I. Digital Public Platforms aligns with key public policy objectives, including During India’s G20 Presidency, Digital Public creation of safe and efficient payment systems for Platforms were formally defined as a set of shared everyone, reducing cash dependence, and supporting digital systems built upon minimal, modular digital digitalisation. FPS continue to grow in both number building blocks that can be utilized by governments, and usage, having been established in more than 70 businesses, academia, and civil society to facilitate jurisdictions across the world. society-wide development.1 III. India as a case study in inclusive, secure, and These platforms comprise open, secure, and scalable DPPs interoperable systems that enable access to public and India’s Digital Public Platforms constitute a well- * Opening Remarks by Shri Sanjay Malhotra, Governor, Reserve Bank of structured, multi-layered system of interconnected India at the High-Level Dialogue on Forging Economic Resilience through Digital Public Platforms held in Washington, D.C. on October 14, 2025. 2 Digital Public Infrastructure and Development: A World Bank Group 1 G20 Framework for systems of Digital Public Infrastructure. Approach; March, 2025. RBI Bulletin October 2025 119SPEECH Opening Remarks at the High-Level Dialogue on Forging Economic Resilience through Digital Public Platforms digital building blocks including digital identity 500 billion USD have been transferred directly to through Aadhaar, instant payment systems via beneficiaries, significantly reducing fraud and leakage. the Unified Payments Interface (UPI), and secure Coming to payments, the Unified Payments data sharing through the Data Empowerment and Interface or UPI is another critical Digital Public Protection Architecture (DEPA). Platform. It has transformed the payments landscape. For us, the guiding principle has been to build It enables transfer of payments in real time, efficiently such platforms in the public sector as a public good from one account to another across banks. with suitable guardrails, and without a profit motive. Around 85% of the digital payment transactions Public and private sector entities can then leverage in India today are carried out through UPI. About 20 on these platforms to quickly develop applications billion transactions are made using UPI every month, across credit, health, social protection, agriculture, representing value equivalent to over 280 billion USD. and several other domains. UPI is a powerful catalyst, accelerating financial While the public sector establishes the inclusion. Small vendors and micro enterprises can foundational infrastructure layer, the success of now accept payments digitally, and build financial Digital Public Platforms is bolstered by active private history, thereby enabling access to formal credit at sector participation. Private sector engagement drives innovation and enhances competition, thereby much lower costs. elevating service quality and user experience. There are other benefits too. A recent research Further, the private sector plays a vital role study on the impact of UPI suggests that higher UPI in innovating and nurturing vibrant developer adoption is associated with lower cash demand3. communities and expanding digital markets. All of Another study shows that a one percent increase in these contribute to the maturity of the ecosystem UPI transaction volumes correlates with a 0.03 percent around the DPPs while maintaining the core principles increase in GDP growth4. of accessibility, inclusivity, and public benefit. Digital payment systems have decreased delivery This approach has resulted in significant positive costs, minimised revenue leakages, and facilitated externalities for growth and development of digital rapid deployment of emergency relief programmes, payment systems in India. I will highlight a few particularly during the global COVID-19 pandemic. initiatives taken by India to build such platforms. IV. International Cooperation I will start with Aadhaar, the unique identity We believe that the benefits of DPPs should platform. It is the very basic fundamental block for be available to the whole world, in the spirit of any digitalisation effort in a country. Aadhaar today ‘Vasudhaiva Kutumbakam’, which means, ‘the world has over 1.3 billion users. Using this identify platform, is one family’. This was also the theme of India’s G20 over 566 million bank accounts have been opened, 316 presidency. We are fully committed to international million of these belong to women. This has provided a collaboration around such platforms. significant fillip to financial inclusion initiatives. It has also enabled direct benefit transfers 3 Impact of UPI on Cash Demand – Evidence from National and Subnational Levels, RBI Bulletin, September, 2025. (DBT) bypassing cash-based subsidy distribution and 4 Decoding India’s UPI phenomenon: A digital revolution with global crediting subsidies directly into bank accounts. Over implications’: Observer Research Foundation, September 2024. 120 RBI Bulletin October 2025Opening Remarks at the High-Level Dialogue on Forging Economic SPEECH Resilience through Digital Public Platforms In the spirit of this collaboration, India developed enabling merchant payments in a few more the Modular Open-Source Identity Platform countries. (MOSIP)5 for digital identity. This free, secure, and (iii) Three, we are supporting deployment of UPI- scalable platform allows other countries to build their like sovereign payment rails or upgrading own national digital ID systems. 27 countries are existing systems in partner countries using currently either adopting or considering MOSIP-based UPI technology stack, while agreement/MoU systems, to deliver essential services quickly, directly, have been signed for deployment in a few and seamlessly to their citizens. more countries. For collaboration in digital payments, we have These efforts will also promote cross-border adopted three strategic approaches: trade and payments, while encouraging efficiency, improving customer experience, and reducing cost. (i) One, we are linking UPI with fast payment systems of other countries for cross-border Concluding remarks remittances. Linkage between India and To conclude, Digital Public Platforms have proved Singapore (UPI-PayNow) is live. Work is to be central to inclusive growth in India. Their impact under progress with a few other countries on welfare transfers, democratisation of payments bilaterally as well as multilaterally. and deepening of financial inclusion has, indeed, been transformative. We are committed to share our model (ii) Two, we are enabling cross-border merchant to help countries accelerate digital transformation. I (P2M) payments through UPI via QR codes am confident that we can work together to empower at merchant locations in both offline and our citizens through Digital Public Platforms. e-commerce mode. This is already live in a few countries and work is in progress for Thank you. 5 MOSIP is an open-source, not-for-profit platform empowering governments to own and operate secure, scalable, and customizable identity systems. RBI Bulletin October 2025 121Driving Inclusive and Sustainable Growth Through Digital Public SPEECH Infrastructure and FinTech Driving Inclusive and electronic KYC. It is at the core of Direct Benefit Transfer (DBT) for government benefits. Sustainable Growth Through Two, the payments layer which translates Digital Public Infrastructure identity into action. Aadhaar Enabled Payment and FinTech* System (AePS) has enabled banking through micro- ATMs and facilitated access even in remote locations. Shri Sanjay Malhotra Unified Payments Interface (UPI) has allowed close to 490 million unique users to make nearly 20 billion I am very happy to participate in this 6th edition transactions every month, almost half of the global of the Global FinTech Fest (GFF). It is a premier forum real-time payment volumes. where the wizards of technology intersect with the Three, the data layer has reshaped how financial experts of finance. It is a unique forum where young services are delivered. Take any government innovators, brimming with bold ideas, converge department, for instance. There is a tremendous with the steady wisdom of experienced leaders. This amount of digitalisation that has happened in each synergy which shapes solutions to common challenges department. I was in the Revenue Department reflects the true spirit of the GFF. This event also earlier. With almost all income data now digitised, reflects India’s ambition to remain at the cutting filing an income tax return in India takes only a few edge of digital innovation. Over the years, the GFF minutes. On average, returns are processed in 10 days has gained from strength to strength. I congratulate the organisers for this huge achievement. and many taxpayers receive their refunds within 24 hours. We are among the world leaders in tax filing In my remarks today, I wish to reflect on our and processing systems. Digital Public Infrastructure (DPI) and FinTech journey so far, the next phase of deepening and Similarly, the Goods and Services Tax (GST). It widening inclusion and sustainability, and the way is a unique model with no parallel in the world. 28 ahead for FinTechs to translate these opportunities states, 8 UTs and the centre – all with a different GST into tangible outcomes. statute passed by different legislatures, but still the same except the name of the state. This unification DPI as the Engine for India’s Growth Story of GST has been possible because of the backbone DPI underpins India’s digital transformation provided by the Goods and Services Tax Network over the last decade or so. It rests on three layers, (GSTN). All this has created a lot of digital data that have played critical roles in addressing barriers comprising the data layer. Further, DigiLocker with to inclusion and enabling innovation at scale. over 590 million users, has enabled citizens to store One, the identity layer, anchored by Aadhaar and share documents securely in a digital form. with more than 1.4 billion enrolments, has made FinTech complementing the DPI it possible to authenticate identity instantly. It has also enabled millions to open bank accounts and Complimenting these three layers of DPI, we have participate in the formal financial system through a vibrant FinTech ecosystem. The foundation of DPI allows FinTechs to set up quickly, scale rapidly, and * Keynote Address by Shri Sanjay Malhotra, Governor, Reserve Bank of India at the Global Fintech Fest 2025, October 8, 2025, Mumbai deliver targeted solutions to not only address current RBI Bulletin October 2025 123SPEECH Driving Inclusive and Sustainable Growth Through Digital Public Infrastructure and FinTech but also future challenges. India is today home to Over the past decade, India has shown how over 10,000 FinTech companies, with cumulative technology, thoughtfully designed and implemented investments exceeding USD 40 billion over the past at scale, can be a force multiplier for sustainable decade. economic development. The FinTech industry, has made it possible to deliver financial services The sector’s phenomenal growth and future at population scale, at an affordable cost. We will potential is underpinned by several key strengths, continue the facilitation for FinTechs to make use apart from the robust DPI. These include a large of the DPI and financial ecosystem for the collective and deep pool of skilled technology talent, a vibrant benefit of the economy. This synergy between public financial ecosystem spanning payments, lending, insurance, pensions, wealth management, etc. which rails and private innovation, has been the bedrock is supporting FinTech innovation, and enabling of India’s success in several domains, including policies and regulatory frameworks which are digitalisation of payments. facilitating FinTechs. The Next Phase of India’s Digital Journey Regular engagement with the FinTech ecosystem The first phase of India’s digital journey was is central to this approach. RBI has been proactive in about building the foundation and expanding access engaging with the FinTech sector, as is borne out by to financial services such as savings, insurance, nearly 500 interactions with FinTech entities during investments. The next phase is about universalising FY 2024-25 alone. In addition, through structured and deepening impact by using data responsibly. I platforms such as FinTeract and Finquiry, we interact will talk about five areas. Some work has been done regularly with innovators and entrepreneurs in in all these areas but more needs to be done. These the FinTech ecosystem. Since March 2024, we have are: (a) aggregation and leveraging financial data; (b) conducted 15 structured sessions under Finteract, the digital rupee; (c) asset tokenisation; (d) artificial covering over 1,100 FinTech representatives. In intelligence; and (e) digital frauds. addition, 14 open interactions with more than 600 Aggregation and Leveraging Financial Data participants have been held under Finquiry since June 2024. Account Aggregator (AA) The Reserve Bank has also established a FinTech First, we need to develop DPI for data integration Repository to collect key information on activities, across various data sources to widen and deepen products, and technologies, enabling more informed financial inclusion. The Account Aggregator (AA) and evidence-based policymaking for the FinTech framework is one such endeavour. It is empowering sector. individuals to share their financial data safely with Recognising the diversity in the FinTech Sector, we regulated entities. This ecosystem has seen notable have, so far, granted recognition to a Self-Regulatory progress with 17 AAs, 650 Financial Information Organisation (SRO) in the FinTech Sector. This will Users (FIUs), 150 Financial Information Providers enable FinTechs which are not directly regulated to (FIPs), 160 million accounts being served, and 3.66 operate within a calibrated framework with baseline billion data requests from FIUs processed by AAs. governance standards and best practices developed Many important government owned data sources like by the industry itself. the GSTN have been included in the AA framework. 124 RBI Bulletin October 2025Driving Inclusive and Sustainable Growth Through Digital Public SPEECH Infrastructure and FinTech On its part, the RBI is in the process of adoption of the e₹ without compromising user introducing standards designed to improve customer convenience. onboarding processes, enhance user interfaces, Programmability features in e₹ are unlocking new strengthen data security, and increase transparency paradigms in purpose-driven direct benefit transfers, in consent management and data sharing under the subsidies, and targeted lending. These features AA framework. have been leveraged by some state governments While there is huge potential for the AA framework demonstrating the potential for making subsidy to grow, its success will depend on two critical aspects, delivery and DBT more effective. For instance, namely, integration with more financial information, Gujarat’s G-SAFAL scheme uses programmable CBDC especially information which is vital for assessing the (p-CBDC) to provide livelihood assistance, allowing financial status of an individual, and interoperability beneficiaries to spend subsidies only on whitelisted across account aggregators. agri-inputs within a geofenced area. Similarly, Andhra Pradesh’s DEEPAM 2.0 scheme provides ULI LPG subsidies through p-CBDC, which is redeemed The Unified Lending Interface (ULI) is another on delivery of gas cylinders by the registered gas landmark step in data aggregation. Credit remains agencies. the lifeblood of inclusive growth. Despite best efforts Asset Tokenisation by the Government, RBI, and the banking system, and huge progress made in this regard, a vast credit Third, asset tokenisation offers new possibilities gap still persists. The ULI seeks to bridge the gap by for Indian financial markets in expanding access, enabling efficient, data-driven, and inclusive credit improving transparency, and enhancing settlement delivery. efficiency through smart contracts. Since its launch in August 2023 till October 03, I am happy to announce that the Reserve Bank has 2025, the ULI pilot has now expanded to 120 data conceptualised the Unified Markets Interface (UMI), sources/services, 58 lenders including banks, NBFCs, as a next-generation financial market infrastructure. co-operative banks with 3.2 million loans sanctioned UMI will have the capability to tokenise financial and ₹1.75 trillion in lending. The ULI is also enabling assets and settlements using wholesale CBDC. Early use of data by lenders to build alternative credit results from the inaugural pilot on the issuance of models, thereby helping expand credit to new-to- Certificate of Deposit, in improving market efficiency credit segments lacking credit history. are encouraging. Digital Rupee (e₹) Artificial Intelligence Second, India’s Central Bank Digital Currency Fourth, AI holds the potential to fundamentally (CBDC), the Digital Rupee (e₹) represents a critical enhance the next generation of DPI in two new rail in the DPI architecture. Since its launch in complementary ways. First, by integrating AI into December 2022, the retail e₹ pilot today has 19 banks existing DPI layers, user experience and efficiency and 7 million users, enabling person-to-person (P2P) can be significantly improved. For example, as well as person-to-merchant (P2M) transactions. conversational payments can simplify transactions Interoperability with UPI is also enabling wider for users with low digital literacy and bring millions RBI Bulletin October 2025 125SPEECH Driving Inclusive and Sustainable Growth Through Digital Public Infrastructure and FinTech into the formal economy. Second, AI itself can be These measures will enhance customer safety developed as a public goods infrastructure. and trust in digital payments. We all need to redouble our efforts to keep our systems safe, secure and fraud The report of the FREE-AI committee constituted proof. by RBI has also highlighted the importance of building foundational public goods for AI in finance, including Conclusion a standardised financial sector data infrastructure, We stand at an important juncture in our digital compute resources, and the development of finance journey. The past decade has demonstrated indigenous AI models, tailored to the needs of the how technology can expand access and empower financial system. businesses. The next phase must build on this strong Digital Frauds foundation, while keeping trust and stability at Fifth, the rapid expansion of digital finance its central theme. The role of FinTechs in this next has also created new challenges such as digital phase will be even more crucial. FinTechs can be the frauds and cyber threats. The Reserve Bank has architects who design and construct digital highways instituted several customer protection measures, and also the products and services on this digital such as two-factor authentication (2FA), tokenisation highway that generate social and economic value. of card on file, and providing customers with the I would like to leave five thoughts for the FinTech control to switch off transactions to secure digital industry to consider. transactions. a. One, build for Inclusion: While there may be The recently announced principle-based higher profits to be made by deepening access framework on authentication of digital transactions to the haves and the privileged, prioritise will provide further impetus to enhancing consumer building systems to expand financial services convenience while strengthening trust in digital to the unaccessed, unreached and unserved transactions. Exclusive internet domains, ‘. bank.in’ segments of society. and ‘. fin.in’, for banks and financial institutions, b. Two, adopt customer-first approach: As and designated numbering series, i.e., ‘1600xx’ Steve Jobs said, “Get closer than ever to for transactional and service calls, and ‘140xx’ for your customers. So close that you tell them promotional communications by regulated entities, what they need well before they realize it are other initiatives to enhance security and public trust in digital transactions. themselves”. Design products and services that are easy to use and accessible for all, with MuleHunter.ai, developed by the Reserve Bank assistive technologies ensuring vulnerable Innovation Hub has been scaled up from about 5 groups such as senior citizens, individuals banks at the beginning of this year to 21 banks. with limited digital literacy, and the specially Unlike earlier approaches, this is enabling them abled are not left behind. As I have said at to use system-wide learning to improve detection other fora, strive to design services so well of mule accounts. Work is also underway on the that there is no need for customer service in Digital Payments Intelligence Platform (DPIP), which the first place. will leverage latest technologies to provide shared intelligence for fraud detection and prevention in c. Three, innovate in credit delivery: Extend near-real time. the success of digital payments to credit 126 RBI Bulletin October 2025Driving Inclusive and Sustainable Growth Through Digital Public SPEECH Infrastructure and FinTech delivery, especially to small businesses and a digitally connected population, enabling policies, individuals. and tech talent, FinTechs can bridge digital divides, foster healthy competition, and drive innovation. d. Four, prioritise trust and compliance: Embed strong data protection, transparency, and In doing so, FinTechs will not only secure their safeguards for consumers into every product own growth but also play a pivotal role in driving and service. progress and contributing to the vision of Viksit Bharat 2047. e. Five, think global, anchor local: Engage with international partners, share learnings, In this hall, we have people with both the adopt global best practices, and strengthen foresight and the capability to act. Let us harness India’s role in shaping the future of digital this opportunity and together shape a shared future finance. of inclusive, sustainable, and innovation-driven growth. By embracing these principles and building on India’s unique strengths of DPI, a vibrant ecosystem, Thank you. Jai Hind. RBI Bulletin October 2025 127Responsible Artificial Intelligence (AI) – Balancing Innovation with SPEECH Financial Stability Responsible Artificial Intelligence equally there have been concerns from AI experts – ranging from concern around bad actors using AI (AI) – Balancing Innovation for bad things to the more fundamental concern that with Financial Stability* human existence is irrelevant once machines achieve superintelligence. I do not intend to dwell on these T Rabi Sankar widely divergent possibilities but only to highlight the limited point that while the benefits of AI are Opening and Context Setting transformative, they need to be used responsibly. In finance, the margin for error is even narrower as Good afternoon, distinguished policymakers, financial institutions are built on trust and economies members of academia, industry leaders and prosper on stability. Therefore, the integration of AI innovators. It is both a pleasure and a responsibility in financial systems must be approached as a matter to address this gathering on a subject that is poised to of profound responsibility with due recognition and shape the future of finance, society, and governance mitigation of risks. alike—Responsible Artificial Intelligence. AI for the Financial Sector AI has rapidly evolved from an academic The Benefits discussion less than a decade back to become an integral part of our daily lives. We encounter it when The promise of Artificial Intelligence in finance we unlock our phones, interact with chatbots, and is by now well recognised. At its core, AI can increasingly, when accessing financial services. In expand financial access, strengthen safeguards, just a few years, AI has evolved from an enabling and reimagine efficiency. It can lead to better technology to a foundational driver of how individuals credit assessment through use of alternative data and businesses make decisions. (like transaction patterns, utility payments, etc.) of unbanked customers. Ability to use massive data Globally, AI is already reshaping financial systems. sources could help in real-time detection of frauds From digital credit underwriting to conversational through identification of unusual transaction banking assistants, AI is demonstrating its ability in patterns, or improve market risk modeling. ways unimaginable a decade ago. India, too, has been a notable participant in this journey. Operational efficiency and cost reduction can get a paradigm shift using AI, e.g., in back-office Yet, as with all powerful innovations, AI carries a processes, KYC, loan processing etc. Chatbots and dual narrative. It promises extraordinary efficiency, virtual assistants would achieve 24×7 customer inclusion, and innovation, but if left unattended, support. Data extraction from financial documents could pose unprecedented threats. As Stephen (e.g., invoices, contracts) through Natural Language Hawking said in 2016 at the launch of the Centre Processing (NLP) could make document processing for the Future of Intelligence (CFI), “the rise of seamless. powerful AI will either be the best or the worst thing ever to happen to humanity. We do not yet know In the investment and trading space, the ability which.” It is acknowledged widely that AI could be of AI models to detect short-term price inefficiencies the permanent answer to poverty and disease. But are already being harnessed. Other benefits include allocation optimisation, use of big data to * Keynote address delivered by Deputy Governor T Rabi Sankar at the Global Fintech Festival, Mumbai on October 7th, 2025. forecast market movements etc. AI driven RegTech RBI Bulletin October 2025 129SPEECH Responsible Artificial Intelligence (AI) – Balancing Innovation with Financial Stability applications help regulated entities with better up with fast moving technology. Over-reliance compliance outcomes. Automated monitoring helps on automation could result in losing oversight or detection of suspicious transactions and generates delayed intervention when things go wrong. There faster compliance. is also the ethical issue of using behavioral data for manipulative cross-selling or risk profiling. AI has the potential to significantly expedite financial inclusion through alternative credit Then there is the ongoing debate about AI and scoring models while language interfaces will job displacement. Whether AI will displace jobs in remove language barriers and reach digitally limited the long run would depend on whether it is like other customers. Investment advice becomes affordable to transformative changes in history like the Industrial small investors through robo-advisors. Revolution or the invention of electricity or whether it is a fundamentally different kind of change. Max The Risks Tegmark, founder of Future of Life Institute argues But these benefits come with significant risks. that while all past technologies amplified human AI systems are trained on vast amounts of data. It ability but did not replace human intelligence, AI is is natural that the learning from the data would the first technology that creates intelligence itself. also extend to learning the bias inherent in data. AI Recognizing these risks is not to diminish the systems trained on biased historical data are likely promise of AI, but to underline the importance to perpetuate or amplify historical discrimination of adopting it responsibly through safeguards, in, for example, credit profiling, or hiring. Even governance, and foresight. small biases in training data can lead to systematic exclusion of population groups from accessing Balancing Innovation with Stability financial services. Algorithmic opacity would make it The key question is, how do we enable difficult to identify possible biases. innovation while safeguarding systemic stability? The ‘Black Box’ problem of AI models, or, in This balance is a necessity for ensuring that AI other words, the lack of explainability, makes these strengthens rather than undermines the financial models non-transparent. This makes it hard for system. If regulatory frameworks are too rigid, they regulators and auditors to understand how decisions can dissuade experimentation, reducing AI to a tool are made, which, in turn, undermines accountability. deployed only by the largest players. On the other Regulatory actions, or denial of service to customers, side, unbridled adoption, particularly in high-impact would typically require reasons to be communicated. areas, could create vulnerabilities that are invisible Absence of explainability may thus constrain the use until they snowball into crises. of such tools. The balance is not only about restraint; it There are systemic risks typical to AI systems, is also about actively encouraging innovation. such as herding behaviour when AI-driven trading This requires policies that create safe spaces for models get widely used, which can amplify volatility. experimentation, such as sandboxes, facilitate open AI misjudgments can trigger market dislocations. digital infrastructures, and provide access to quality Such problems are amplified by the possibility that data, enabling firms to innovate with confidence. It it becomes difficult to assign responsibility when also requires incentives for responsible innovation, an AI makes a harmful or erroneous decision. Legal so that firms see governance not as a burden but as a frameworks would always find it difficult to catch competitive advantage. 130 RBI Bulletin October 2025Responsible Artificial Intelligence (AI) – Balancing Innovation with SPEECH Financial Stability Responsible AI – Guiding Principles unchanged - progress and prudence must go hand in hand. As we reflect on the transformative potential of AI, it becomes imperative to anchor its adoption RBI has also taken initiatives for the industry within a framework of principles. The RBI took through RBIH, such as MuleHunter.ai™ for a proactive step through setting up the FREE-AI combating the menace of mule accounts. Unlike Committee, which has articulated a set of guiding the traditional rule-based systems currently sutras for responsible and ethical adoption of AI in used by banks, MuleHunter.ai™ offers greater the financial sector. These principles are intended to accuracy and precision with significantly low false serve as touchstones for all stakeholders. positive rates. Currently, the model has been At the core is the principle of trust, the deployed in about 20 commercial banks. In bedrock of finance. Every deployment of AI must addition, work is also underway to explore a Digital reinforce, not diminish, the trust of consumers, Payments Intelligence Platform (DPIP), that can institutions, and society. Equally important is a analyse and assign a risk score to transactions on a people-first orientation, ensuring that technology real time basis. serves human needs. The report emphasizes Ringfencing and Guardrails innovation over restraint, coupled with fairness and accountability in outcomes. AI can inform decisions, While AI holds immense promise, the financial but it cannot own them. The accountability must system demands the highest degree of prudence. always rest with human actors and institutions Critical infrastructures and institutions must be deploying AI. ringfenced from unchecked risks that could arise from untested or poorly governed AI deployments. The principle of ‘understandable by design’ The objective is not to obstruct innovation but to underscores the need for transparency, ensuring that ensure that its application never compromises the AI decisions are explainable to both regulators and stability or integrity of the system. consumers. And above all, safety and resilience must be built into every layer of adoption. To this end, practices such as stress-testing of Alongside regulatory oversight, it is equally AI models under diverse scenarios, red-teaming critical to encourage industry-led codes of conduct, to identify vulnerabilities, and the adoption of self-regulation, and the institutionalisation of ethical explainability tools and standards are indispensable. standards. This collaborative approach ensures that These mechanisms would help regulators and responsibility is not a mandate of regulators but a institutions alike to supervise AI outcomes, detect shared culture across the fintech ecosystem. weaknesses before they escalate, and ensure that AI-driven decisioning can be understood and, if RBI’s Approach and Role necessary, challenged. The RBI has always fostered “innovation within safeguards.” Through calibrated guidance, Equally important is that AI systems are supervisory oversight, and structured engagement subjected to rigorous oversight and layered with with industry, the RBI aims to foster an ecosystem inherent checks. Financial AI applications must where financial innovation flourishes without be designed such that they cannot inadvertently compromising systemic stability. As AI reshapes destabilize markets, payment systems, or consumer the financial landscape, this approach remains confidence. RBI Bulletin October 2025 131SPEECH Responsible Artificial Intelligence (AI) – Balancing Innovation with Financial Stability This approach demands “safety by design” parallel focus on AI literacy, for individuals to engage rather “safety as an afterthought.” Safeguards confidently and safely with these new tools. must be embedded throughout the lifecycle, from In the short term, the focus needs to be conception and data training to model validation on awareness and capacity building. Financial and real-world application. Retrofitting safety once institutions, technology providers, and regulators risks have materialized is inadequate and potentially must train personnel, strengthen internal governance destabilizing. structures, and introduce initial risk frameworks to Research, Innovation, and Collaboration ensure that AI deployment is encouraged with focus on safety. Awareness campaigns and workshops can Embedding AI in finance is not a one-time also help smaller institutions and FinTechs integrate exercise. It demands continuous research, AI responsibly. experimentation, and learning, as models, techniques In the medium term, the FREE-AI principles and risks evolve rapidly. It also calls for partnerships should guide the industry practice. AI can begin to among industry, academia, regulators, and start-ups. play a substantial role in SupTech, credit decisioning, Co-developing solutions, sharing knowledge, and and financial inclusion. In parallel, the industry stress-testing innovations must be fostered. should develop its own governance standards, Entities should have in place systems for self-regulatory codes, and ethical guidelines to responsible data governance, ethical sourcing of complement regulatory oversight. data, and privacy-by-design in every model. They In the long term, India can aspire to become a should develop common standards, toolkits, and trusted global hub for responsible AI in finance. By disclosure mechanisms so that model design, demonstrating how innovation can coexist with training data, and decision logic can be explained strong safeguards, India can set an example for to regulators and customers. Safeguards such as emerging economies and the Global South, attracting digital watermarking of synthetic content should talent, investment, and collaboration. be explored to deter misuse. Internal policies Concluding Remarks and processes must be revised to embed AI risk assessment into the product lifecycle. Continuous As we conclude, it is essential to reiterate that monitoring, stress scenarios, and independent audits AI must remain a force for good - empowering should be institutionalised. individuals, strengthening institutions, and enhancing the resilience of our financial system. The Way Forward Its promise will be realised only when adopted As we look ahead, the path for responsible AI responsibly, with constant attention to societal in India’s financial sector is exciting yet deliberate, impact. demanding a phased approach that balances Responsible AI should not be framed merely as a innovation, inclusion and stability. regulatory requirement, but as a matter of business Alongside technological progress, the human ethics. Every model deployed, every decision element remains central. AI literacy for consumers automated, and every service enabled through AI to understand both the potential and risks of AI must reinforce the confidence of consumers, provide will be critical. Just as financial literacy has been a fair access, and respect the dignity and privacy of all national priority, the coming decade will require a participants. 132 RBI Bulletin October 2025Responsible Artificial Intelligence (AI) – Balancing Innovation with SPEECH Financial Stability Let me leave you with five guideposts. Not as ecosystem. Ensure India leads in creating, tasks, but as a collective mission: the 5Ts not just consuming. 1. Trust – Commit to building AI systems that 4. Technology for Good – Let innovation be guided by purpose. The test of every AI uphold and enhance the trust in the system. application must be whether it advances Embed responsibility and ethics in every inclusion, resilience, and efficiency. algorithm. 5. Togetherness – Above all, we must work 2. Transparency – Reinforce clarity and together. Regulators, industry, academia, explainability in AI, ensuring that decisions and global partners, to collaborate and co- can be understood, audited, and questioned develop. when necessary. Through shared commitment, ethical 3. Training – Invest in training to nurture a deployment, and continuous vigilance, we can ensure world-class AI talent within our financial that AI fulfils its promise as a transformative enabler. RBI Bulletin October 2025 133Inclusion is Innovation’s Highest Purpose: Lessons from India SPEECH Inclusion is Innovation’s Highest The idea I wish to underline today is that inclusion is innovation’s highest purpose. In India, Purpose: Lessons from India* financial inclusion has been pursued not as a single policy objective but as an ongoing national mission. Shri Swaminathan J. Over the past decade, the Government, the Reserve Bank, and the banking sector have worked together Shri C S Setty, Chairman, State Bank of India, to expand access to millions of households. The real Mr Peter Simon, CEO and distinguished delegates task, however, lies in deepening usage, improving of the WSBI, quality, and building lasting trust. Shri Vinay Tonse, Managing Director, SBI and To capture progress along this journey, the Reserve WSBI Asia Regional President, Bank has developed a Financial Inclusion Index that tracks three dimensions—access, usage, and Friends, colleagues, ladies and gentlemen, good quality.1 Over the years, there has been considerable evening, everyone! progress made under the index. Five iterations of FI At the outset, congratulations to WSBI for Index have been published till date, with March 2025 completion of a century, in bringing together savings value standing perceptibly improved at 67.0 vis-à-vis and retail banks, from over 70 countries, representing 43.4 for the period ending March 2017.2 Having the interests of customers of approximately 6,400 said that, it is also an observation that, while access banks across all continents. As a global organisation, to financial services has improved significantly in WSBI promotes a sustainable, inclusive and balanced recent years, the challenge now lies in promoting growth and job creation around the world, with a active usage and strengthening service quality. clear focus on individual consumers, households and Achieving this requires more than technology; MSMEs. The members are main street players that are it calls for products tailored to diverse needs and rooted strongly within the communities they serve, limitations, supported by human interfaces that and support the local economies, with the shared build trust and confidence. ‘Embedding empathy values of being Retail, Regional and Responsible. I into service delivery’ is a crucial step in ensuring that fondly recall my own association with WSBI during financial inclusion is meaningful and effective. my time in SBI and I am thankful to SBI and WSBI for Equally important are transparent grievance this kind invitation. redressal systems and clear consumer protection It is indeed a pleasure to welcome the WSBI measures. Defined turnaround times, limited liability delegation to India. During this study visit, I hope protections, and visible compensation frameworks you will see how financial inclusion and digital reassure customers that they are safe in using digital innovation have evolved here through the interplay of 1 The FI-Index has been conceptualised as a comprehensive index public policy, regulatory oversight, and institutional incorporating details of banking, investments, insurance, postal as well as the pension sector in consultation with Government and respective initiatives. Along with recognising the challenges in sectoral regulators. The index captures information on various aspects of India’s journey, I trust this visit will also provide space financial inclusion in a single value ranging between 0 and 100, where 0 represents complete financial exclusion and 100 indicates full financial to reflect on how different approaches to inclusion inclusion. The FI-Index comprises of three broad parameters (weights and innovation can inform and enrich one another. indicated in brackets) viz., Access (35%), Usage (45%), and Quality (20%) with each of these consisting of various dimensions, which are computed * Address by Shri Swaminathan J, Deputy Governor, Reserve Bank of based on a number of indicators. It has been constructed without any ‘base India at the World Savings and Retail Banking Institute (WSBI) Study year’ and as such it reflects cumulative efforts of all stakeholders over the Visit to State Bank of India (SBI) under the theme ‘Advancing Financial years towards financial inclusion. Inclusion Through Digital Innovation’ on Monday, October 6, 2025. 2 Reserve Bank of India introduces the Financial Inclusion Index. RBI Bulletin October 2025 135SPEECH Inclusion is Innovation’s Highest Purpose: Lessons from India services. Together, these measures foster confidence payments universal, ULI has the potential to mark a and encourage meaningful engagement with the turning point in how affordable credit is accessed and financial system. delivered at scale. Digital Public Infrastructure and India Stack Digital innovation is also extending inclusion beyond payments. Micro-insurance and pension India’s strong digital public infrastructure products are increasingly being delivered through underpins its financial inclusion efforts. At the digital platforms, helping low-income households centre of this architecture lies the India Stack–a set of interoperable, open, and scalable digital layers built strengthen financial resilience. Cross-border UPI as public goods. These include Aadhaar for digital linkages are making remittances faster, cheaper, and identity, DigiLocker for secure digital storage and more seamless, reinforcing trust in formal channels. sharing of documents, and the Account Aggregator RBI’s Role in Responsible Innovation framework for consent-based data sharing. Together, At the Reserve Bank, we seek to foster an they provide the rails on which a wide range of environment where innovation can flourish services can be delivered securely, at scale, and at an responsibly. Through initiatives such as regulatory affordable cost. sandboxes, the Innovation Hub, and enabling Among these layers, the Unified Payments frameworks for digital financial services, we Interface (UPI) has emerged as the flagship success encourage the development of new solutions that story. By integrating multiple accounts into a single are secure, sustainable, and customer-centric. At the mobile platform, UPI has revolutionised retail same time, we place due emphasis on governance, payments. risk management, and customer protection, so that While UPI has rightly captured global attention, it technological progress is always matched by resilience represents only the most visible part of a much wider and trust in the financial system. transformation. Behind it stands a comprehensive The rapid rise of fintechs, digital platforms, digital payments ecosystem that includes NEFT and embedded finance models has expanded the and RTGS for retail and high-value transfers, the boundaries of the financial system and created Bharat Bill Payment System for interoperable bill new types of risks. These are not simply traditional payments, the Aadhaar Enabled Payment System risks in digital form, but new frontiers arising from for last-mile inclusion through micro-ATMs, and algorithmic decision-making, heavy dependence on BharatQR for merchant acceptance. Together, these data, concentration of services in a few platforms, systems form a layered, resilient, and inclusive and deep technological interconnections. Left architecture. They ensure that digital transactions are not only fast and convenient but also secure, unmanaged, such risks can quickly migrate from accessible, and trusted—cornerstones of India’s individual institutions to the broader system. transition from a predominantly cash economy to a This is why we encourage financial institutions thriving digital one. to move to a proactive resilience mindset, embedding Building on this success, India is now developing digital risk awareness and safeguards into their the Unified Lending Interface (ULI), which seeks governance frameworks. Innovation and safety to bring the same principles of openness and are not opposing goals; when balanced well, they interoperability to credit markets. Just as UPI made reinforce each other and build lasting trust. 136 RBI Bulletin October 2025Inclusion is Innovation’s Highest Purpose: Lessons from India SPEECH Closing Reflections Allow me to return to the thought with which I began: inclusion is innovation’s highest purpose. As As we look ahead, there is growing recognition you reflect on India’s experience during this study worldwide that digital innovation is the most visit, I hope you will see how collaboration between powerful driver of financial inclusion. India’s journey policy, regulation, and institutions can continue shows that access is only the first step—the true test to widen the frontiers of inclusion. India’s journey lies in meaningful usage, in the quality of services, shows that when innovation meets inclusion, and in the trust that people place in the system. transformation becomes inevitable. I hope this Innovations that do not embed responsibility can exchange inspires fresh ideas, new partnerships, and erode this trust, but when innovation and inclusion renewed resolve to make finance truly universal. move together, they reinforce each other and create lasting transformation. Thank you. RBI Bulletin October 2025 137Transforming Public Sector Banks for a Viksit Bharat SPEECH Transforming Public Sector Yet, amidst these headwinds, the Indian economy continues to demonstrate resilience and stability. This Banks for a Viksit Bharat* confidence is not only evident in domestic sentiment but has also been reinforced by global assessments, Shri Swaminathan J. most recently the upgrade of India’s sovereign rating outlook by S&P. Secretary, DFS, Shri M. Nagaraju, other senior officials from the Government, Chairman and MDs of Much of this resilience rests on the strength of SBI, MD, CEOs and EDs of Public Sector Banks, and my our banking system. Over the past decade, Indian other colleagues, a very good morning to all of you. banks, and particularly our public sector banks, have undergone a remarkable turnaround. Balance I am honoured to be here at PSB Manthan 2025. sheets have been repaired, capital strengthened, Personally, this gathering feels like a homecoming, and asset quality improved. At the same time, PSBs a return to a familiar space of dialogue and shared have deepened their traditional role as anchors of purpose, where the concerns, aspirations, and vision financial inclusion while also keeping pace with of our public sector banks take centre-stage. the wider digital transformation of the sector. Their The very word Manthan or churning has contribution to Jan Dhan Yojana, to direct benefit timeless symbolism in our traditions. It reminds transfers, and to the expansion of UPI in semi-urban us that progress rarely comes easily; it requires and rural centres, reflects how PSBs combine scale effort, reflection, and perseverance. Much like a with reach to serve the real economy. family coming together to deliberate and debate for the common good, PSB Manthan brings together Periods of comfort, however, can create the risk of policymakers, regulators, and bankers to churn our complacency and mistakes are typically made in good collective experiences and insights so that we may times. Therefore, the challenge before PSBs today draw out the nectar of transformation. is not only to stay clear of the earlier shortcomings but to build on the gains of the past decade and I commend the Department of Financial Services transform themselves further. PSBs have to remain for nurturing this platform over the years, and for strong, adaptable, and future-ready to contribute ensuring that it continues to evolve as a space where meaningfully to the vision of a Viksit Bharat by 2047. ideas are debated, challenges are confronted, and the future course of PSBs is shaped with collective The Banyan Tree Metaphor: Transforming PSBs from wisdom. providers of stability to enablers of new growth The Context: Resilience amidst Global Headwinds As we reflect on what this transformation entails, I am reminded of a powerful symbol from our own We meet today at a time when the global banking history. Many of you will recall that when environment remains marked by uncertainty. the State Bank of India was established in 1955, its Geopolitical tensions, shifting trade alignments, logo was a sprawling banyan tree. The choice was climate transitions, and rapid technological disruptions are reshaping the contours of growth and deliberate, for the banyan has long been revered finance worldwide. as the tree of life. its deep roots embody stability, its sturdy trunk represents resilience, and its wide * Address by Shri Swaminathan J, Deputy Governor, Reserve Bank of India at the PSB Manthan 2025 on Friday, September 12, 2025. canopy offers protection to all. RBI Bulletin October 2025 139SPEECH Transforming Public Sector Banks for a Viksit Bharat In later years, however, the banyan tree logo was depth and resilience to governance. They provide replaced by the now familiar blue circle with a keyhole, boards with independent and reliable perspectives, designed by the National Institute of Design1. While helping them act with foresight rather than hindsight. the banyan conveyed strength and shade, it also drew Governance today must also evolve with criticism for casting such a dense canopy that little changing times. Boards need sharper tools, such as else could grow beneath it, which seemed at odds real-time insights that flag emerging risks or customer with the image of a modern and accessible bank. concerns. As banks adopt artificial intelligence and Today, for the PSBs, the task is not only to data driven systems, assurance must also extend to provide shade and shelter to millions of households these new domains. Ensuring fairness, transparency, and enterprises but also to ensure that beneath and accountability in automated decisions is becoming their canopy, new growth flourishes in the form of as important as monitoring credit or operational risk. abundant and affordable credit to MSMEs, start-ups, Deep roots allow a tree not only to survive but women entrepreneurs, and rural enterprises. also to nurture new growth. In the same way, strong In that spirit, I find the banyan tree still a fitting governance supported by robust assurance will allow metaphor for our PSBs. Its roots, trunk, aerial roots, banks to take on fresh initiatives with confidence, branches, and canopy together capture the five knowing that these are built on a stable foundation pillars on which PSBs can build their future. These of trust. five pillars in today’s context are strong governance, The Sturdy Trunk: Financial Strength and Resilience financial resilience, innovation and adaptability, people and culture, and an all inclusive customer- The trunk of the banyan tree stands tall and centricity. sturdy, holding the entire tree together through calm and storm. For our banks, the trunk is financial Deep Roots: Governance and Assurance – evolve to strength and resilience. meet new risks Over the past decade, PSBs have strengthened The banyan tree can survive storms because of its their capital position and improved asset quality. These deep roots. They may not be visible, but they are the gains must now be protected and deepened. Banks true source of its longevity and stability. For banks, these roots are strong governance and assurance. should hold forward looking capital buffers that reflect their risk profile and growth ambitions rather It means boards that are engaged, leadership that than simply complying with regulatory floors. Asset is accountable, and decisions that are transparent and quality must also be managed with a preventive ethical. Regulation can guide, but governance must mindset, using early warning systems and predictive come from within. Supervisory intervention can fix, analytics to identify stress before it becomes a crisis. but it cannot substitute for an internal culture of integrity. True resilience today goes beyond capital and credit. It also means operational resilience. With The assurance functions, including risk customers relying on banks for 24x7 digital access, management, compliance and internal audit, give even short disruptions can erode trust and create 1 The Hindu Business Line. “From Banyan Tree to Keyhole: NID Designed systemic impact. Banks must therefore strengthen the New Iconic Logo for SBI.” The Hindu Business Line, August 10, 2022. Available at: https://www.thehindubusinessline.com/money-and-banking/ their technology infrastructure, cyber safeguards, from-banyan-tree-to-keyhole-nid-designed-the-new-iconic-logo-for-sbi/ article64328336.ece vendor oversight, and business continuity planning 140 RBI Bulletin October 2025Transforming Public Sector Banks for a Viksit Bharat SPEECH so that services remain secure and uninterrupted the agility of innovators. under every circumstance. Yet, greater reliance on technology inevitably A strong trunk allows the tree to support new increases vulnerability. Cybersecurity, vendor branches and new growth. For PSBs, resilience both oversight, and business continuity must therefore be financial and operational is what will allow them to built into every digital initiative by design. expand and support India’s development priorities Aerial roots renew the strength of the banyan tree with confidence. and allow it to spread further. For PSBs, continuous Aerial Roots of Renewal: Innovation and Adaptability innovation and adaptability will ensure that their – for an open, adaptive, tech driven banking canopy remains relevant, and that fresh growth can thrive beneath it. The banyan tree constantly sends down aerial Living Branches and Leaves: People and Culture – roots, which in time become fresh pillars of support. from process-oriented service to empathetic people For our banks, these aerial roots are innovation and centric culture adaptability. The branches and leaves are what people first In today’s financial landscape, technology is no notice when they see a banyan tree. For banks, longer optional. Modernising core IT systems and they represent employees who bring strategy to life adopting advanced analytics are essential to remain through everyday actions. competitive. AI/ML can strengthen fraud detection, improve credit assessment, and personalise customer A large, committed workforce remains the most engagement. valuable asset of PSBs, even in an age of artificial intelligence. No algorithm can replace trust, empathy, Innovation is not just about new tools. It is and human judgment. To keep the branches strong, also about smarter ways of delivering them. PSBs investment in human capital is vital. Staff must should consider shared technology platforms be equipped with new skills in digital banking, and joint development of digital infrastructure to cybersecurity, and analytics. Training should be leverage economies of scale, reduce costs, and ensure practical and engaging, including simulation-based consistency in customer experience. They can also learning. experiment with what is known as a digital twin2, Equally important is staff attitude and culture. a virtual model that mirrors a real process such as Every customer should feel respected, not merely the working of a branch or the journey of a customer processed or attended to. True service comes from applying for a loan. By testing changes on the digital an empathetic customer first approach. PSBs must twin first, banks can identify bottlenecks and improve therefore nurture a culture of professionalism, efficiency before making changes in the real world. empathy, and accountability so that their people Adaptability also means openness to new remain the strongest ambassadors of trust. partnerships. Collaborating with FinTechs including The Canopy of Trust and Inclusion – from the Unified Lending Interface (ULI), and using other transaction driven banking to customer centric, open banking interfaces can bring the best of both trust-based inclusion worlds - the reach and trust of PSBs combined with The canopy of the banyan provides shade to all. 2 IBM. “What Is a Digital Twin?” IBM Research – Think, 5 August 2021. Available at: https://www.ibm.com/think/topics/what-is-a-digital-twin For PSBs, it represents their enduring role in customer RBI Bulletin October 2025 141SPEECH Transforming Public Sector Banks for a Viksit Bharat centricity and financial inclusion. From Jan Dhan trust and ensure that customers feel empowered in to direct benefit transfers, from self-help groups to every interaction. MSME lending, PSBs have given millions of Indians Conclusion financial dignity. This role must continue and evolve, In villages, it is under the banyan tree that for today’s customers expect not just access but also people gather to seek counsel, to deliberate, and convenience, speed, and fairness. Meeting these to find shade in times of need. In much the same expectations requires services that are transparent way, citizens look to PSBs not only for loans and and responsive. deposits but also for inclusion, stability, security, and Customer centricity begins with trust. Every progress. Let us commit to nurturing this banyan tree complaint is a test of confidence. By not giving room so that it remains a symbol of trust and resilience and for complaints and by resolving issues, when they contributes decisively to the realisation of a Viksit arise, promptly and fairly, banks can strengthen that Bharat by 2047. Thank you. Jai Hind. 142 RBI Bulletin October 2025ARTICLES State of the Economy Resilience and Revival: India’s Private Corporate Sector Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments Compliance to Confidence: A Data Quality Model for Central Banks Steel Under Siege: Understanding the Impact of Dumping on IndiaState of the Economy ARTICLE State of the Economy* Global economic activity held up in September. The global composite purchasing managers’ index Global uncertainty has edged up. In the US, (PMI) expanded in September, driven by growth in both trade and economic policy uncertainty increased output and new business. in September. Global growth, however, has broadly Equity markets in major economies, supported held up. Investor sentiments dampened in October, on by optimism surrounding Big Tech, the US Fed’s renewed US-China trade tensions and prolonged US monetary easing and softer energy prices, gained in government shutdown, after a phase of buoyancy. The September. The month of October, however, ushered Indian economy displayed resilience amidst broader in selling pressures as investor sentiments dampened global uncertainty and weak external demand. High- on renewed US-China trade tensions and prolonged frequency indicators point to a revival in urban demand US government shutdown. In the bond market, US and robust rural demand. Headline consumer price government bond yields fell, following the Fed’s index (CPI) inflation moderated sharply in September, policy rate cut and the escalation of US-China trade tensions. Portfolio flows to major emerging market marking its lowest reading since June 2017. and developing economies (EMDEs) moderated in Introduction September as equity segment witnessed outflows Global uncertainty has edged up. In the US, both due to country-specific risks amidst challenging trade and economic policy uncertainty increased in external environment. September. Despite heightened uncertainties, global Commodity prices generally remained subdued. growth, aided by transitory factors, broadly held up Prices of precious metals, however, strengthened due in H1:2025.1 Global financial market movements to safe-haven demand. Crude oil prices moderated, broadly exhibited optimism and buoyancy despite supported by the ceasefire in the Middle East, and policy uncertainty and geopolitical tensions. In forecasts of a supply glut in 2026.2 this environment, the IMF’s World Economic Inflation trends remained divergent across Outlook of October 2025 revised up its 2025 global economies, as major advanced economies (AEs) growth projection, but it still reflects a deceleration continued to grapple with inflation remaining compared to 2024. Further, the risks to the growth above target levels, while major EMDEs experienced outlook remain tilted to the downside. disinflation. Persisting global uncertainties and their potential spillovers to domestic economies, * This article has been prepared by Rekha Misra, Asish Thomas George, continued to weigh on central banks’ monetary Shashi Kant, Rajni Dahiya, Oorja Yadav, Anupam Kumar, Yamini Jhamb, policy decisions. Jessica Maria Anthony, Satyarth Singh, Aayushi Khandelwal, Ettem Abhignu Yadav, Rishabh Kumar, Satyendra Kumar, Radhika Singh, The Indian economy displayed resilience amidst Suganthi D, Shivam, Nilava Das, Agamani Saha, Ayan Paul, Shreya Bhan, Avnish Kumar, Amit Pawar, Apeksha Sharma, Pallak Goyal, Athira C A, broader global uncertainty and weak external Khushi Sinha and Ajay Kumar. The guidance and comments provided by Dr. Poonam Gupta, Deputy Governor, is gratefully acknowledged. Peer demand. Despite the external sector headwinds, the review by Pallavi Chavan, Joice John and Pawan Gopalakrishnan is also International Monetary Fund (IMF), Organisation acknowledged. Views expressed in this article are those of the authors and do not represent the views of the Reserve Bank of India. for Economic Cooperation and Development 1 These include front-loading of trade flows and consumption, in anticipation of higher US import tariffs. 2 Oil Market Report - October 2025, International Energy Agency. RBI Bulletin October 2025 143ARTICLE State of the Economy (OECD) and the World Bank have revised India’s Overall domestic financial conditions remained growth forecast upwards for the current financial benign in October (up to October 16), after remaining year, underscoring the continued momentum in mildly tight in the latter half of September. System domestic demand. The high-frequency indicators also liquidity, on average, remained in surplus during pointed to resilient domestic economic activity, with this period. The weighted average call rate – the signs of revival in urban demand and robust rural operating target of monetary policy – hovered close demand. The agricultural sector sustained its growth to the policy repo rate in September and October. momentum, supported by above-normal rainfall, Average yields on treasury bills moderated while and higher kharif sowing. Although manufacturing those on certificates of deposit and commercial momentum moderated slightly, business confidence papers hardened. In the fixed income segment, in manufacturing and services reached a six-month while the short-end of the government securities peak, reflecting higher optimism. According to yields declined, yields at the longer-end remained the surveys of consumer sentiments, consumer flat. Corporate bond yields and spreads increased confidence for the current period and the year across tenors and the rating spectrum. ahead also improved.3 The capital expenditure of the union government continued to grow at a robust Indian equity markets declined in the second pace. Receipts, however, experienced a slowdown. half of September as the hike in H-1B visa fees Merchandise trade deficit widened, on account of and fresh tariff imposition by the US weighed on an increase in non-oil deficit, to a 13-month high in investor sentiments. Thereafter, markets gained September. in early October amidst optimism surrounding the Headline inflation in September fell sharply to Reserve Bank’s regulatory reform measures aimed its lowest level since June 2017 and remained below at strengthening the resilience and competitiveness the target for the eighth consecutive month. The of the banking sector, improving the flow of credit, deflation in food was the key driver of the softening promoting ease of doing business, and enhancing in headline inflation. Core inflation (CPI excluding consumer satisfaction. The gains were supported food and fuel inflation) edged up, reflecting the by domestic investors who remained net buyers combined effect of gold price inflation as well as the notwithstanding persistent selling by foreign significant pick-up in housing inflation. portfolio investors (FPIs) in the secondary market in The Monetary Policy Committee, in its bi- September. Net FPI flows, however, turned positive monthly review of October 2025, kept the policy repo in October amidst renewed participation in primary rate unchanged at 5.5 per cent and continued with equity market and sustained investments in the debt its neutral stance. The maintenance of the status quo segment. was based on the consideration that the transmission The INR witnessed depreciation in September, of past front-loaded policy easing was yet to fully play out, and on the need for greater clarity regarding the accompanied by phases of volatility. Key external evolving macroeconomic situation before taking the vulnerability indicators reflect improvement, with next policy step. the external debt-to-GDP ratio and net international investment position (IIP)-to-GDP ratio strengthening 3 https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=23428; https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=23429 at end-June compared to end-March. 144 RBI Bulletin October 2025State of the Economy ARTICLE Set against this backdrop, the remainder of The IMF’s World Economic Outlook of October the article is structured into four sections. Section 2025 retained its projection of a decelerated global II covers the rapidly evolving developments in the growth in 2025 compared to 2024, with the balance of global economy. Section III provides an assessment risks tilted to the downside. Global growth projection for 2025 was revised upward by 20 basis points (bps) of domestic macroeconomic conditions. Section IV to 3.2 per cent, relative to the July release, largely encapsulates financial conditions in India, while reflecting the impact of the H1 growth. Growth Section V presents the concluding observations. projections for the major AEs, including US, UK, II. Global Setting Euro area and Japan were revised upwards. Among Global uncertainty has edged up. In the US, both EMDEs, output growth remained robust, led by India, trade and economic policy uncertainty increased in which continued to benefit from resilient domestic September. Despite heightened uncertainties, global demand. growth in H1:2025 broadly held up, supported by The OECD’s Interim Economic Outlook front-loaded trade and investment activity ahead of (September 2025) also revised global growth US tariff adjustments. Global growth momentum, projections upward by 30 bps to 3.2 per cent for going forward, is projected to moderate as temporary 2025, reflecting resilience in the first half of the year boost fades and structural challenges re-emerge. (Table II.1). Echoing IMF’s outlook, both OECD and Table II.1: Global GDP Growth Projections – Select AEs and EMDEs (Y-o-y, per cent) Organisation IMF OECD Projection for 2025 2026 2025 2026 Month of Projection Oct Jul Oct Jul Sep Jun Sep Jun World 3.2 3.0 3.1 3.1 3.2 2.9 2.9 2.9 Advanced Economies 1.6 1.5 1.6 1.6 US 2.0 1.9 2.1 2.0 1.8 1.6 1.5 1.5 UK 1.3 1.2 1.3 1.4 1.4 1.3 1.0 1.0 Euro Area 1.2 1.0 1.1 1.2 1.2 1.0 1.0 1.2 Japan 1.1 0.7 0.6 0.5 1.1 0.7 0.5 0.4 Emerging Market and Developing Economies 4.2 4.1 4.0 4.0 Russia 0.6 0.9 1.0 1.0 1.0 1.0 0.7 0.7 Emerging and Developing Asia 5.2 5.1 4.7 4.7 India# 6.6 6.4 6.2 6.4 6.7 6.3 6.2 6.4 China 4.8 4.8 4.2 4.2 4.9 4.7 4.4 4.3 Latin America and the Caribbean 2.4 2.2 2.3 2.4 Mexico 1.0 0.2 1.5 1.4 0.8 0.4 1.3 1.1 Brazil 2.4 2.3 1.9 2.1 2.3 2.1 1.7 1.6 Sub-Saharan Africa 4.1 4.0 4.4 4.3 South Africa 1.1 1.0 1.2 1.3 1.1 1.3 1.3 1.4 Note: #: India’s data is on a fiscal year basis (April-March). Sources: IMF, World Economic Outlook, October 2025; and OECD Economic Outlook, September 2025. RBI Bulletin October 2025 145ARTICLE State of the Economy World Bank cautioned that the full impact of US tariff demand, new export orders contracted for the sixth measures and lingering policy uncertainty is yet to consecutive month. While service export orders unfold, posing downside risks to the global outlook. recorded a modest expansion, manufacturing export orders continued to contract (Table II.2). Global uncertainty edged up further in August. The US economic and trade policy uncertainty indices Economic activity, as per PMI indices, expanded rose in September, amidst heightened political and in major AEs, including the US, the UK, Japan, and fiscal concerns surrounding the potential government the Eurozone in September. Among major EMDEs, shutdown.4 Financial market volatility in the US and economic activity expanded in India and China, major EMDEs remained largely stable in September. while it continued to contract in Brazil and Russia However, it increased in October on country specific (Chart II.2a). New export orders declined across major developments, including political uncertainty in economies, reflecting subdued external demand, France, government shutdown in the US and renewed whereas they recorded an expansion in India and trade tensions (Chart II.1a and II.1b). China (Chart II.2b). The global composite PMI, driven by growth in Global commodity prices generally remained output and new business, expanded in September, subdued in September. Gold and metal prices firmed though at a slightly slower pace. Both manufacturing up, whereas food and crude oil prices softened. Food and services sectors signalled an expansion, with prices eased as decline in sugar, dairy, cereals, and the services sector continuing to outpace the vegetable oil prices more than offset an increase in manufacturing sector. Amidst subdued global meat prices (Chart II.3a). Crude oil prices moderated Chart II.1: Lingering Economic and Trade Policy Uncertainty a. Uncertainty Indices b. Volatility Indices (Index(Jan=2024), leftscale; Index (Jan 2025=100) Index(Jan=2024),right scale) 600 20000 18000 500 16000 14000 400 12000 300 10000 8000 200 6000 4000 100 2000 0 0 World Uncertainty Index US Economic Policy Uncertainty Index US VIX Emerging Markets VIX US Trade Policy Uncertainty Index (RHS) EURO STOXX VIX Sources: Chicago Board Options Exchange; Bloomberg; www.PolicyUncertainty.com; and World Uncertainty Index (WUI) database. 4 Economic Policy Uncertainty (EPU) index measures the level of uncertainty surrounding future economic policies, derived from the frequency of specific keywords like “economy,” “policy,” and “uncertainty” in major newspaper articles. Trade Policy Uncertainty Index measures the unpredictability of government trade policy decisions. World Uncertainty Index (WUI) is computed by counting the percent of word “uncertain” (or its variant) in the Economist Intelligence Unit country reports. 146 RBI Bulletin October 2025 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 52-luJ 52-guA 52-peS 310 280 250 220 190 160 130 100 70 52-naJ-10 52-naJ-91 52-beF-60 52-beF-42 52-raM-41 52-rpA-10 52-rpA-91 52-yaM-70 52-yaM-52 52-nuJ-21 52-nuJ-03 52-luJ-81 52-guA-50 52-guA-32 52-peS-01 52-peS-82 52-tcO-61State of the Economy ARTICLE Table II.2: Global Composite PMI Expanded, but Export Orders Remained Weak Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Sep-25 PMI Composite 51.9 52.3 52.4 52.6 51.8 51.5 52.1 50.8 51.2 51.7 52.5 52.9 52.4 PMI Manufacturing 48.7 49.4 50.1 49.6 50.1 50.6 50.3 49.8 49.5 50.4 49.7 50.9 50.8 PMI Services 52.9 53.1 53.1 53.8 52.2 51.5 52.7 50.8 52 51.8 53.5 53.3 52.8 PMI Export orders 48.5 48.9 49.3 48.7 49.6 49.7 50.1 47.5 48.0 49.1 48.5 48.9 49.6 PMI Export orders: Manufacturing 47.5 48.3 48.6 48.2 49.4 49.6 50.1 47.3 48.0 49.2 48.2 48.7 49.5 PMI Export orders: Services 51.6 50.7 51.3 50.3 50.2 50.2 50.1 48.2 47.9 48.7 49.4 49.3 50.1 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. The heat map is applied to data from April 2023 to September 2025. The map is colour coded–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. Source: S&P Global. in October supported by the ceasefire in the Middle Inflation trends remained divergent across East, and forecasts of a supply glut in 20265. Gold economies, as major AEs continued to grapple with prices firmed on safe-haven demand amidst trade inflation remaining above their target levels, while tensions, weak economic data from the Euro area, US major EMDEs experienced disinflation. In the US, CPI fiscal uncertainty and expectations of Fed rate cuts inflation edged up to its highest level since January (Chart II.3a and II.3b). 2025, although core inflation remained stable. In Chart II.2: Purchasing Managers’ Index: Comparison across Jurisdictions a. S&P Global Composite PMI b. PMI Export Orders (Index) (Index) 64 58 60 54 56 50 52 48 46 44 42 40 Sep-25 Aug-25 Sep-25 Aug-25 Note: A level of 50 indicates no change in activity, a reading above 50 signals expansion and below 50 suggests contraction. Source: S&P Global. 5 Oil Market Report - October 2025, International Energy Agency. RBI Bulletin October 2025 147 aidnI eropagniS SU niapS anihC labolG ailartsuA ynamreG ylatI napaJ enozoruE KU ecnarF aissuR adanaC lizarB aidnI anihC niapS setatS detinU ynamreG ailartsuA enozoruE napaJ ylatI ecnarF modgniK detinU adanaC aissuRARTICLE State of the Economy the Euro area, headline inflation rose in September, In Russia, inflation, although on a moderating path, driven by higher prices for food and services. The remained well above the target. South Africa’s UK recorded its highest inflation rate since January inflation eased in August (Chart II.4b). 2024, whereas in Japan, headline inflation eased to Equity markets in major economies, particularly its lowest level since November 2024 (Chart II.4a). in the US, gained in September, supported by Among major EMDEs, inflation in Brazil witnessed a optimism surrounding Big Tech, the US Fed’s modest uptick. China remained in the deflationary monetary easing, and softer energy prices. The month zone for the second consecutive month in September. of October, however, witnessed selling pressures Chart II.4: Divergent Inflation Trends across Economies a. Select AEs b. Select EMEs (Per cent) (Per cent) 4.0 3.8 3.5 3.0 2.9 2.7 2.5 2.2 2.0 1.5 Brazil Russia China US (CPI) UK Euro area Japan South Africa India Sources: Bloomberg; and OECD. 148 RBI Bulletin October 2025 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS 11 9 8.0 7 5 5.2 3 3.3 1.5 1 -0.3 -1 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS Chart II.3: Commodity and Food Prices a. Commodity and Food Indices b. Gold - Copper - Brent Crude Oil Index (Jan 2024=100) Index (Jan 2025=100) 115 110 105 100 95 90 Food and Agriculture Organization Food Price Index Bloomberg commodity index World Bank Commodity Price Index Gold Copper Brent Crude oil Sources: Food and Agriculture Organization; Bloomberg; and World Bank Pink Sheet. 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 52-luJ 52-peS 160 150 140 130 120 110 100 90 80 70 52-naJ-10 52-naJ-91 52-beF-60 52-beF-42 52-raM-41 52-rpA-10 52-rpA-91 52-yaM-70 52-yaM-52 52-nuJ-21 52-nuJ-03 52-luJ-81 52-guA-50 52-guA-32 52-peS-01 52-peS-82 52-tcO-61State of the Economy ARTICLE as investor sentiments dampened on renewed US- declined further in October in the wake of escalating China trade tensions, and prolonged US government US-China trade tensions and the US government shutdown. In the Euro area, equities posted modest shutdown (Chart II.5b). The JP Morgan Emerging gains, supported by the US Fed’s monetary easing and Markets Bond Index (EMBI) spread narrowed in sector-specific rallies, although the upside was capped September reflecting improved risk appetite as by weak Q2 GDP data and renewed trade tensions. investors exposure to emerging market debt increased Japanese equities gained on a weaker yen and amidst expectations of monetary easing in major AEs expectations of prolonged accommodative monetary and favourable domestic inflation conditions in major policy stance, but witnessed selling pressures in EMDEs. Renewed fears around trade wars and policy October on political uncertainty, renewed trade uncertainty in some EMDEs, however, widened the tensions and a strengthening yen. In China, equity spread in October. markets remained broadly range-bound as trade The US dollar index moved range-bound during uncertainty and soft domestic economic indicators September-October. It initially weakened on softer weighed on investor sentiment, offsetting support labour data and rising Fed rate cut expectations but from government stimulus (Chart II.5a). gained later as investors sought safety amidst US fiscal In the bond market, US government bond yields uncertainty and renewed US-China trade tensions. fell, following the Fed’s rate cut in September. It Emerging market currencies appreciated against US Chart II.5: Global Financial Markets a. Equity Indices: Select Economies b. Government Bond Yields Index (April 07, 2025=100) (Per cent, left scale; Index, right scale) 160 150 140 130 120 110 100 90 S&P 500 SSE Composite Index Nikkei 225 STOXX 600 Note: Equity markets are represented by S&P 500 for US, SSE Composite Index for US Govt Bonds JPMorgan EMBI Global Spread (RHS) China, Nikkei 225 for Japan, and STOXX 600 for Europe. Source: Bloomberg. Source: Bloomberg. c. Currency Indices d. Moderation in Portfolio Flows to EMDEs (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. RBI Bulletin October 2025 149 52-rpA-70 52-rpA-32 52-yaM-90 52-yaM-52 52-nuJ-01 52-nuJ-62 52-luJ-21 52-luJ-82 52-guA-31 52-guA-92 52-peS-41 52-peS-03 52-tcO-61 5.0 360 4.8 340 4.6 4.4 320 4.2 4.0 300 4.0 264.2 280 3.8 3.6 260 3.4 240 52-naJ-10 52-naJ-91 52-beF-60 52-beF-42 52-raM-41 52-rpA-10 52-rpA-91 52-yaM-70 52-yaM-52 52-nuJ-21 52-nuJ-03 52-luJ-81 52-guA-50 52-guA-32 52-peS-01 52-peS-82 52-tcO-61 1880 110 1860 1843.2 108 1840 106 1820 104 1800 102 1780 1760 100 1740 98 1720 98.3 96 1700 94 52-naJ-10 52-naJ-91 52-beF-60 52-beF-42 52-raM-41 52-rpA-10 52-rpA-91 52-yaM-70 52-yaM-52 52-nuJ-21 52-nuJ-03 52-luJ-81 52-guA-50 52-guA-32 52-peS-01 52-peS-82 52-tcO-61 70 60 50 40 30 20 10 0 -10 -20 -30 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peSARTICLE State of the Economy dollar in September, following the Fed’s rate cut, but policy rate by 50 bps, Philippines by 25 bps while the gains moderated in October on renewed US tariff Thailand kept its policy rate unchanged. threats and a prolonged US government shutdown III. Domestic Developments (Chart II.5c). Portfolio flows to EMDEs moderated in The Indian economy continued to exhibit September as equity segment witnessed outflows due resilience amidst an uncertain external environment. to country-specific risks amidst challenging external Indicators of capacity utilisation and domestic environment (Chart II.5d). demand signalled improvement. Lead indicators of Persisting global uncertainties and their potential manufacturing and services continued to show a spillovers to domestic economies, continued to weigh robust expansion. Inflation remained benign, well on central banks’ monetary policy decisions. A third below the target rate. of select major central banks surveyed reduced their policy rate in September (Chart II.6). Among major The IMF revised upwards India’s GDP growth AEs, the US, Canada, and Sweden reduced their policy projections for 2025 by 20 bps to 6.6 per cent.6 India’s rates by 25 bps each in September, whereas the Euro growth projection for 2026 was, however, revised area, the UK, and Japan kept their benchmark interest downwards, reflecting the medium-term impact of rates unchanged. Among major EMDEs, Indonesia the steep US import tariffs. The OECD also revised and Russia reduced their policy rates by 25 bps and upwards India’s GDP growth projections for 2025 by 100 bps, respectively, in September, while Malaysia, 40 bps to 6.7 per cent from the earlier 6.3 per cent Brazil, South Africa, and China kept their benchmark underscoring the continued momentum in domestic rates steady. In October, New Zealand reduced its demand. Chart II.6: A Third of Major Central Banks Reduced Policy Rates in September Type Countries 150 RBI Bulletin October 2025 42-naJ 52-naJ 52-peS 5202.01.71 Australia 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 0 0 0 0 0 0 -1 0 -1 0 0 0 0 0 0 0 0 0 0 Euro area 0 0 0 0 0 0 0 0 -1 0 0 0 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 Advanced New Zealand 0 0 0 0 0 0 0 0 0 -1 -1 0 0 -1 0 0 0 0 0 0 0 -1 Economies South Korea 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 0 0 0 0 -1 0 0 0 0 0 0 0 0 0 0 0 Switzerland 0 0 0 0 0 0 0 0 0 0 0 -1 0 0 0 0 0 0 0 0 0 0 United Kingdom 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 0 0 0 0 -1 0 0 0 0 0 0 0 0 0 0 0 0 0 Brazil 0 -1 -1 0 0 0 0 0 0 0 1 1 1 0 1 0 1 0 0 0 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 India 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 0 0 0 0 Indonesia 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Malaysia 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Emerging Market Mexico 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 -1 0 -1 -1 0 0 0 0 Economies Philippines 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 0 0 0 0 2 0 1 2 0 0 0 0 0 0 0 -1 -2 0 -1 0 Saudi Arabia 0 0 0 0 0 0 0 0 -1 0 0 0 0 0 0 0 0 0 0 0 0 0 South Africa 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 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. 6 The World Bank also revised India’s growth forecast upwards to 6.5 per cent for the current financial year, from 6.3 per cent earlier, based on South Asia Development Update: Jobs, AI, and Trade.State of the Economy ARTICLE The Monetary Policy Committee, in its bi- businesses ramped up inventory ahead of the festive monthly review of October 2025, kept the policy repo season, buoyed by GST reforms. While electricity rate unchanged at 5.5 per cent and continued with demand remained stable, petroleum consumption the neutral stance. The maintenance of the status quo picked up pace. Digital payments recorded robust was based on the consideration that the transmission double-digit growth (y-o-y) in volume and value (Table III.1). Average daily payments value in September of past front-loaded policy easing is still ongoing, 2025 witnessed the sharpest month-on-month uptick and on the need for greater clarity regarding the in the FY 2025-26 so far. This could possibly reflect a evolving macroeconomic situation before taking the significant pick-up in festive season demand, aided next policy step. The Reserve Bank also announced by the GST rate reductions and offers on e-commerce a slew of regulatory reform measures aimed at platforms. strengthening the resilience and competitiveness of the banking sector, improving the flow of credit, During September, overall demand conditions promoting ease of doing business, and enhancing showed signs of improvement. Rural demand consumer satisfaction7. remained strong, as evidenced by the pick-up in growth of two-wheeler and automobile sales, on Aggregate Demand the back of good monsoon and robust agricultural The high-frequency indicators for overall activity. Urban demand showed some signs of revival economic activity remained robust in September. with passenger vehicle sales recording their highest GST e-way bill generation reached a record high as growth in six months (Table III.2).8 Table III.1: High Frequency Indicators – Robust Economic Activity Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Sep-25 GST E-way bills 18.5 16.9 16.3 17.6 23.1 14.7 20.2 23.4 18.9 19.3 25.8 22.4 21.0 GST revenue 6.5 8.9 8.5 7.3 12.3 9.1 9.9 12.6 16.4 6.2 7.5 6.5 9.1 Toll collection 6.5 7.9 11.9 9.8 14.8 18.7 11.9 16.6 16.4 15.5 14.8 12.7 4.5 Electricity demand -0.8 -0.4 3.7 5.1 1.3 2.4 5.7 2.8 -4.8 -2.3 2.6 3.8 3.4 Petroleum consumption -4.4 4.1 10.6 2.0 3.0 -5.2 -3.1 0.2 0.7 0.5 -3.9 2.6 7.0 Of which 3.0 8.7 9.6 11.1 6.7 5.0 5.7 5.0 9.2 6.8 5.9 5.5 8.0 Petrol Diesel -1.9 0.1 8.5 5.9 4.2 -1.3 0.9 4.2 2.1 1.5 2.4 1.2 6.6 Aviation turbine fuel 10.4 9.4 8.5 8.7 9.4 4.2 5.7 3.9 4.3 3.3 -2.3 -2.9 -0.9 Digital payments-volume 36.3 40.3 30.1 33.1 33 26.7 30.8 30 29.2 28.3 30.9 31.1 25.4 Digital payments-value 21.5 27.5 9.5 19.6 18.6 9.5 17.3 18.4 12.6 17.4 16.6 5.3 13.6 <<Contraction --------------------------------------------------------------------------------------- Expansion>> Notes: 1. The y-o-y growth (in per cent) has been calculated for all indicators. 2. The heatmap is applied to data from April 2023 to September 2025. Digital Payments data for September 2025 is provisional. 3. The heatmap 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. Sources: Goods and Services Tax Network (GSTN); RBI; Central Electricity Authority (CEA); and Ministry of Petroleum and Natural Gas, GoI. 7 The package of twenty-two regulatory measures announced includes simplification of FEMA regulations for non-residents establishing businesses, rationalisation of external commercial borrowing rules, and enabling banks to fund corporate acquisitions, among others. For further details, see https:// www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=61333. 8 As per the Federation of Automobile Dealers Association (FADA), the overlap of Navratri and GST cuts drove a 35 per cent (y-o-y) surge in passenger vehicle sales. RBI Bulletin October 2025 151ARTICLE State of the Economy Table III.2: High Frequency Indicators- Revival of Urban Demand Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Sep-25 Urban Domestic air passenger traffic 7.4 9.6 13.8 10.8 14.1 12.1 9.9 9.7 2.6 3.7 -2.5 -0.5 demand Retail passenger vehicle sales -18.8 32.4 -13.7 -2.0 15.5 -10.3 6.3 1.6 -3.1 2.5 -0.8 0.9 5.8 Retail automobile Sales -9.3 32.1 11.2 -12.5 6.6 -7.2 -0.7 2.9 5.4 4.8 -4.3 2.8 5.2 Rural Retail tractor sales 14.7 3.1 29.9 25.8 5.2 -14.5 -5.7 7.6 2.8 8.7 11.0 30.1 3.6 demand Retail two-wheeler sales -8.5 36.3 15.8 -17.6 4.2 -6.3 -1.8 2.3 7.3 4.7 -6.5 2.2 6.5 <<Contraction ----------------------------------------------------------------------------------------- Expansion>> Notes: 1. The y-o-y growth (in per cent) has been calculated for all indicators. 2. The heatmap is applied to data from April 2023 to September 2025, other than for the domestic air passenger traffic, where the data is till August 2025. 3. The heatmap 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. Sources: Airports Authority of India; Federation of Automobile Dealers Associations (FADA); and Ministry of Rural Development, GoI. Various indicators of employment conditions expansion zone. As per the Naukri JobSpeak index, reflected a mixed picture. The all-India unemployment the growth in white-collar job listings accelerated, rate inched up marginally to 5.2 per cent after led by hiring in insurance, real estate and BPO/ITES. declining during the last two months. Labour force Further, the sharp decline in work demand under participation rate and worker population ratio the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) indicated improving increased to their highest level since May, driven rural employment conditions (Table III.3). by gains in rural areas. PMI employment indices for both manufacturing and services witnessed During FY 2025-26 (April-August), the key deficit some deceleration in September but remained in indicators of the union government stood higher, Table III.3: Robustness in High Frequency Indicators for Employment Indicator Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Sep-25 Unemployment rate (PLFS: All-India) 5.1 5.6 5.6 5.2 5.1 5.2 Unemployment rate (PLFS: Rural) 4.5 5.1 4.9 4.4 4.3 4.6 Unemployment rate (PLFS:Urban) 6.5 6.9 7.1 7.2 6.7 6.8 Naukri JobSpeak Index 6.0 10.0 2.0 8.7 3.9 4.0 -1.5 8.9 0.3 10.5 6.8 3.4 10.1 PMI employment: manufacturing 52.1 53.3 52.9 53.4 54.8 54.5 53.4 54.2 54.9 55.1 53.3 53.1 52.1 PMI employment: services 53.4 54.3 56.6 55.5 56.3 56.2 52.5 53.9 57.1 55.1 51.4 52.2 51.9 MGNREGA: work demand -13.4 -7.6 3.9 8.2 14.4 2.8 2.2 -6.5 4.4 4.4 -12.3 -26.1 -27.0 <<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 the Naukri index. 3. The heatmap is applied to data from April 2023 to September 2025. 4. The heatmap 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 heatmaps, 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; Info Edge; and S&P Global. 152 RBI Bulletin October 2025State of the Economy ARTICLE as compared to the corresponding period of the do not pose a major concern for the overall growth. previous year (Chart III.1a).9 This was mainly due to a Despite turbulence in the external sector, India’s higher growth in total expenditure, especially capital merchandise trade during H1:2025-26 remained resilient. During H1, the merchandise trade expenditure, coupled with a decline in tax revenue deficit was higher than that of last year, primarily receipts. The direct tax collections shrank marginally driven by oil and electronic goods. Exports to the US, due to a decline in income tax collections.10 The which had been buoyant up to August, contracted growth in indirect tax collections also witnessed a thereafter, partly reflecting the impact of the 50 per slowdown owing to a moderation in the growth of cent tariffs. GST collections, and a contraction in customs duty More recently, on September 25th, the US collections.11 announced 100 per cent tariff on the pharma sector Key deficit indicators of states during April-August effective from October 1, 2025. This tariff will be 2025 were also higher than the same period last year applicable on branded or patented pharmaceutical (Chart III.1b). This was largely due to a moderation products, except on companies building their in the growth of states’ GST collections and sales manufacturing plants in the US. For India, US is tax/VAT. Growth in revenue expenditure decelerated the largest export destination for pharmaceutical slightly, while capital expenditure rebounded. products.12 Out of the total pharma exports from India to the US, generic medicines constitute the most.13 Trade Hence, majority of India’s pharmaceutical exports to As India’s economy remains majorly powered by the US is expected to remain shielded from the tariff domestic sources, high US tariffs on India’s exports impact. Chart III.1: Deficit Indicators Higher than Previous Year (Up to end-August) a. Union Government b. State Governments (Actuals as per cent of budget estimates) (Actuals as per cent of budget estimates) 40 37.9 38.1 120 104 100 30 27.0 80 24.7 23.7 69.5 20 60 40 10 27.3 29.9 26.6 7.8 20.5 20 0 0 Revenue Gross Fiscal Primary Deficit Revenue Gross Fiscal Primary Deficit Deficit Deficit Deficit Deficit 2024-25 2025-26 2024-25 2025-26 Note: In Chart b, data pertains to 25 States/UTs. Sources: Controller General of Accounts; and Comptroller and Auditor General of India. 9 As per the latest data released by the Controller General of Accounts (CGA). 10 The direct tax collections declined by 0.9 per cent in April-August 2025-26 compared to the corresponding period of 2024-25. The income tax contracted by 2.5 per cent, while corporate taxes recorded a modest growth of 2.1 per cent. 11 The growth in indirect tax collection stood lower at 2.7 per cent during April-August 2025-26 than that of 9.4 per cent in the corresponding period of the previous year. The growth in GST collections and custom duty stood at 5.0 per cent and -11.9 per cent, respectively, during the same period. 12 Share of the US in India’s total pharmaceutical exports stood at 34.5 per cent in 2024-25. RBI Bulletin October 2025 153ARTICLE State of the Economy In September, merchandise trade deficit primarily due to a fall in imports of transportation widened to 13-month high of US$ 32.1 billion from services (Chart III.3). US$ 24.7 billion in September 2024 on account of Aggregate Supply the increasing non-oil deficit (Chart III.2a).14 While Agriculture merchandise exports expanded at a moderate pace, Southwest monsoon rainfall at the all-India level merchandise imports surged in September (Chart stood 8 per cent above normal (Chart III.4a).16 While III.2b).15 Services trade continued to remain favourable Chart III.3: Services Exports Record Moderating Growth in August 2025. The net services export earnings (US$ billion) expanded by 12.2 per cent (y-o-y) to US$ 15.6 billion. 35 Services exports growth decelerated in August, reflecting moderation in business services and 25 software services exports. Services imports contracted 15 13 Generic medicines are mostly accounted for in drug formulations and the biological category, which constituted around 92 per cent of total pharma 5 2.7 exports to the US in 2024-25. 14 The non-oil deficit increased to US$23.1 billion in September 2025, compared to US$14.1 billion a year ago due to a rise in gold deficit. The -5 share of non-oil deficit in total deficit increased to 71.8 per cent from 57.0 -5.3 per cent a year ago. 15 Merchandise exports stood at US$36.4 billion in September [growth of -15 6.8 per cent (y-o-y)]. Electronic goods, petroleum products, engineering goods, rice, and marine products performed well while tobacco, plastic and linoleum, and textile products contributed negatively to exports. Merchandise imports stood at US$68.5 billion in September [growth of 16.7 Source: RBI. per cent (y-o-y)]. Gold, fertilisers (crude and manufactured), electronic goods, silver, and vegetable oil were the major drivers contributing to the increase in import growth during the month. Petroleum, crude and products; coal, coke and briquettes; pulses, iron and steel, and organic and inorganic chemicals dragged imports down. 154 RBI Bulletin October 2025 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 80 69 60 40 36 20 0 -20 -32 -40 Exports Imports Trade balance Exports Imports 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS Chart III.2: India’s Merchandise Trade a. Merchandise Trade Deficit Widened in September b. Exports Grew albeit Slower than Imports (US$ billion) (Y-o-y, per cent) 25 20 16.7 15 10 5 6.8 0 -5 -10 -15 -20 Sources: PIB; DGCI&S; and RBI staff estimates. 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS Exports Imports 16 Further, the cumulative post-monsoon rainfall (October 01-16) has been 23 per cent above the normal as compared to 3 per cent below the normal during corresponding period of the previous year.State of the Economy ARTICLE the excessive rains towards the end of the season have Chart III.5: Increased Kharif Sown Area increased the possibility of damage for kharif crops, (Lakh hectares, left scale; per cent, right scale) 500 120 adequate soil moisture and record high reservoir levels augur well for the upcoming rabi season (Chart 100 400 III.4b). 80 Aided by good southwest monsoon, the 300 60 overall acreage under the kharif season surpassed 200 the previous year’s levels (Chart III.5).17 Rice, 40 maize, pulses, and sugarcane saw an increase in 100 20 sown area, while the area under oilseeds and cotton declined. 0 0 Rice Pulses Coarse Oilseeds Sugarcane Cotton cereals The combined stock of rice and wheat with 2024-25 2025-26 the government remains comfortable due to Per cent of full season normal area (RHS) Notes: 1. Data is as on October 03. strong procurement operations.18 The increase in 2. Horizontal line denotes the full season normal area for crops. Source: Ministry of Agriculture and Farmers’ Welfare. minimum support prices (MSP) for the rabi marketing season (April 2026 to March 2027), announced on Industry October 01, seeks to ensure remunerative prices In August, growth in industrial activity, as to farmers while incentivising crop diversification measured by the year-on-year change in the Index (Chart III.6).19 of Industrial Production (IIP), moderated from the Chart III.4: Southwest Monsoon Rainfall Ends Above Normal a. Monthly Distribution b. Higher Reservoir Storage (Per cent deviation over normal) (Per cent of full reservoir level) 20 110 15 15 15 12 100 9 9 91 10 8 8 90 87 55 5 80 79 0 70 -5 60 -10 50 -11 -15 40 Jun Jul Aug Sep Jun-Sep Northern Eastern Western Central Southern All India 2024 2025 Last 10 years average 2024 2025 Note: 1. While the actual end date of the southwest monsoon may vary slightly, the India Meteorological Department assumes September 30 as the official end date. 2. Reservoir levels as on October 16, 2025. Sources: India Meteorological Department and Central Water Commission. 17 As on October 03 2025, the overall kharif acreage stood at 1121.5 lakh hectares, 0.6 per cent higher over the previous year and 2.3 per cent over the full season normal acreage. 18 As on October 01, 2025, public stock was 2.5 times the buffer norm. As of October 15, 2025, the cumulative procurement of paddy stood at 64.9 lakh tonnes against 29.4 lakh tonnes on the corresponding date of the previous year. 19 The minimum support prices (MSP) for the rabi marketing season (April 2026 to March 2027), announced on October 01, 2025, have been increased in the range of 4.0 per cent (for Gram) to 10.1 per cent (for Safflower). RBI Bulletin October 2025 155ARTICLE State of the Economy The available high-frequency indicators for Chart III.6: MSP Increased for Rabi Crops for Marketing Season 2026-27 September suggest robust manufacturing activity. (Y-o-y, per cent) Business expectations under the PMI manufacturing 12 index jumped to a seven-month high, driven by 10.1 10 optimism surrounding the GST reforms. Crude 8.6 and finished steel output growth accelerated, 8 reflecting renewed momentum in infrastructure 6.6 6 and construction activity. Automobile production 4.0 4.2 4.5 recorded double-digit growth in September, led by the 4 passenger vehicles segment. Stable domestic demand, 2 coupled with a sharp rise in exports sustained the sector’s strong momentum. Going forward, festive 0 demand impulse and the GST rate cut are expected Gram Rapeseed and Lentil Wheat Barley Safflower Mustard (Masur) to further boost production and enhance affordability 2025-26 over 2024-25 2026-27 over 2025-26 (Table III.4). Source: Ministry of Agriculture and Farmers’ Welfare. previous month following a deceleration in the Over time, there has been a consistent increase manufacturing sector growth. in the share of renewable capacity in the total Table III.4: High Frequency Indicators for Industry Showed Robust Growth Indicator Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Sep-25 IIP headline 3.2 3.7 5.0 3.7 5.2 2.7 3.9 2.6 1.9 1.5 4.3 4.0 IIP manufacturing 4.0 4.4 5.5 3.7 5.8 2.8 4.0 3.1 3.2 3.7 6.0 3.8 IIP capital goods 3.5 2.9 8.9 10.5 10.2 8.2 3.6 14.0 13.3 3.0 6.8 4.4 PMI manufacturing 56.5 57.5 56.5 56.4 57.7 56.3 58.1 58.2 57.6 58.4 59.1 59.3 57.7 PMI export order 52.9 53.6 54.6 54.7 58.6 56.3 54.9 57.6 56.9 60.6 57.3 56.1 56.5 PMI manufacturing: future output 61.6 62.1 65.5 62.5 65.1 64.9 64.4 64.6 63.1 62.2 57.6 60.5 64.8 Eight Core Index 2.4 3.8 5.8 5.1 5.1 3.4 4.5 1.0 1.2 2.2 3.7 6.3 Electricity generation: conventional -1.3 0.5 2.7 4.5 -1.3 2.4 4.8 -1.8 -8.2 -6.1 -0.8 1.0 0.7 Electricity generation: renewable 12.5 14.9 19.0 17.9 31.9 12.2 25.2 28.0 18.2 28.7 26.4 22.7 Automobile production 10.1 10.0 8.0 1.3 9.4 2.3 6.5 -1.7 5.2 1.2 10.7 8.1 10.8 Passenger vehicle production -3.4 -4.0 6.5 9.2 3.7 4.5 11.2 10.8 5.4 -1.8 0.1 -4.1 16.1 Tractor production 2.7 0.4 24.7 20.9 23.7 -7.8 18.5 20.5 9.1 9.8 11.5 9.4 23.0 Two-wheelers production 12.9 13.3 8.8 -0.6 10.3 1.6 5.6 -4.1 4.7 1.4 12.3 10.0 9.8 Three-wheelers production 3.9 -6.7 -5.5 7.6 16.2 6.5 6.0 4.1 16.9 8.6 24.0 15.8 15.9 Crude steel production 0.3 4.2 4.5 8.3 7.4 6.0 8.5 9.3 11.0 12.6 13.8 12.7 15.0 Finished steel production 0.7 4.0 2.8 5.3 6.7 6.7 10.0 6.6 7.0 10.9 13.8 13.8 14.7 Imports of capital goods 10.9 7.0 4.7 6.1 15.5 -0.5 8.6 24.6 15.7 3.4 12.0 -1.4 10.1 <<Contraction ----------------------------------------------------------------------------------------- Expansion>> Notes: 1. The y-o-y growth (in per cent) has been calculated for all indicators (except for PMI). 2. The heatmap 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 heatmap is applied on data from April 2023 till September 2025, other than for the Index of Industrial Production, Eight Core Index and electricity generation: renewable, where the data are till August 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 heatmaps, 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 Tractor and Mechanisation Association. 156 RBI Bulletin October 2025State of the Economy ARTICLE National Geothermal Energy Policy21, representing a Chart III.7: Renewable Capacity Additions Remain Robust major diversification of its renewable energy portfolio (As a percentage of total installed capacity) to complement the intermittency of solar and wind 60 power. Fiscal policy also became more supportive 50 2 of the green transition with reduction in GST on 40 11 key renewable energy components.22 This would make clean power more affordable and also increase 30 3 11 10 competitiveness of India-made renewable energy 20 equipment. 10 15 25 Services 4 0 India’s services sector activity showed resilience in September. PMI services continued to show strong Solar Hydro Wind Bio-Power expansion in business activity. Growth in port traffic Note: *As at end- August 2025. Source: Central Electricity Authority. accelerated, led by an uptick in containerised cargo and installed capacity, particularly of solar energy coal while, retail commercial vehicles sales remained (Chart III.7)20. India’s clean energy transition gained steady. Growth in steel consumption remained stable momentum in September. India launched its first (Table III.5). Table III.5: High Frequency Indicators for Services Showed Resilience Indicator Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Sep-25 PMI services 57.7 58.5 58.4 59.3 56.5 59.0 58.5 58.7 58.8 60.4 60.5 62.9 60.9 International air passenger traffic 11.2 10.3 10.7 9.0 11.1 7.7 6.8 13.0 5.0 3.4 5.5 7.7 Domestic air cargo 14.0 8.9 0.3 4.3 6.9 -2.5 4.9 16.6 2.3 2.6 4.8 7.1 International air cargo 20.5 18.4 16.1 10.5 7.1 -6.3 3.3 8.6 6.8 -1.2 4.2 4.5 Port cargo traffic 5.8 -3.4 -5.0 3.4 7.6 3.6 13.3 7.0 4.3 5.6 4.0 2.5 11.5 Retail commercial vehicle sales -10.4 6.4 -6.1 -5.2 8.2 -8.6 2.7 -1.0 -3.7 6.6 0.2 8.6 2.7 Hotel occupancy 2.1 -5.3 11.1 -0.2 1.2 0.6 1.9 7.2 -2.8 -0.3 -2.4 -3.1 Steel consumption 11.2 8.1 9.5 5.2 10.9 10.9 13.6 6.0 8.1 9.3 7.3 10.0 9.1 Cement production 7.6 3.1 13.1 10.3 14.3 10.7 12.2 6.3 9.7 8.2 11.6 6.1 <<Contraction --------------------------------------------------------------------------------------------- Expansion>> Notes: 1. The y-o-y growth (in per cent) has been calculated for all indicators (except for PMI). 2. The heatmap 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 heatmap is applied to data from April 2023 to September 2025, other than for domestic and international air cargo, international air passenger traffic, hotel occupancy and cement production, where the data are till August 2025. 4. The data on international air passenger traffic for August 2025 growth rate is calculated by aggregating daily data. 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 heatmaps, 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; Joint Plant Committee; Office of Economic Adviser; and S&P Global. 20 As of August 2025, the country has added roughly 33 GW of new renewable capacity since January 2025. The cumulative installed renewable capacity now exceeds 240 GW, bringing India closer to its 500 GW non-fossil-fuel target by 2030. 21 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2167657 22 GST on key renewable energy components were reduced from 12 per cent to 5 per cent. RBI Bulletin October 2025 157 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 42-3202 52-4202 *62-5202ARTICLE State of the Economy Inflation Core (i.e., CPI excluding food and fuel) inflation edged up to 4.6 per cent in September from 4.2 per Headline CPI inflation moderated sharply to 1.5 cent in August, driven by ‘personal care and effects’ per cent in September from 2.1 per cent in August, sub-group, on account of rising gold and silver marking the lowest year-on-year rate since June 2017 prices. Core inflation excluding gold and silver also (Chart III.8)23. The decline in headline inflation was picked up to 3.2 per cent from 3.0 per cent led by primarily due to food and beverages group moving increased inflation in housing and ‘pan, tobacco and back into deflation territory. intoxicants’. Footwear, health, education, transport The deflation in the food group placed at 1.4 and communication, and recreation and amusement per cent, was on account of a decline in the prices sub-groups recorded a moderation in inflation. of vegetables, pulses and spices. Inflation in sub- Inflation in both rural and urban areas eased groups such as cereals, eggs, oils and fats, fruits, to 1.1 per cent and 2.0 per cent, respectively, in milk, prepared meals, and non-alcoholic beverages September. While the state level inflation ranged moderated. Meat and fish, and sugar, however, from (-) 1.0 per cent to 9.1 per cent. Majority of witnessed an increase in inflation (Chart III.9). states recorded inflation below 2 per cent. A broad- Fuel and light inflation moderated in September based moderation in state-level inflation rates was driven by a decline in electricity prices while inflation observed, as inflation declined or remained stable in continued to remain elevated for LPG. 26 states/UTs (Chart III.10). Chart III.8: Easing Food Inflation Drove the Decline in Headline Inflation a. CPI Inflation b. Contibution to Inflation (Y-o-y, per cent) (Percentage points) 8 7 6 5 4 3 1.5 2 1 0 -1 Foodandbeverages CPI excludingfoodandfuel Fuelandlight CPI Headline (y-o-y,per cent) Sources: National Statistics Office (NSO); and RBI staff estimates. 23 The decline in headline inflation by about 50 basis points (bps) came entirely on account of favourable (negative) base effects which offset a positive momentum of 10 bps. 158 RBI Bulletin October 2025 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS 10 8 6 4.6 4 2.0 2 1.5 0 -1.4 -2 Foodandbeverages CPI excludingfoodandfuel Fuelandlight CPI Headline (y-o-y,per cent) 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peSState of the Economy ARTICLE Chart III.9: Key Drivers of the Decline in Inflation: Vegetables, and Oils and Fats (Y-o-y, Per cent) Sources: NSO; and RBI staff estimates. High-frequency food price data for October oil while groundnut oil prices eased. Key vegetable so far (up to 17th) point towards a pick-up in cereal (tomato, onion, and potato) prices softened, with prices. Among pulses, prices moderated for gram dal, the decline being most pronounced for tomatoes tur/arhar dal and moong dal. Within edible oils, prices (Chart III.11). firmed up for mustard oil, sunflower oil and palm Chart III.10: Broad-based Moderation in State-level CPI Inflation (Y-o-y, per cent) Inflation Range Number of States/UTs <2 21 2-4 12 4-6 2 6-8 0 8-10 2* Inflation Trend Number of States/UTs Decline or 26 Stable Increase 11 <2 2-4 4-6 8-10 Notes: 1. Map is for illustrative purposes only. 2. *: Lakshadweep and Kerala have experienced inflation at 8-10 per cent. Sources: NSO; and RBI Staff estimates. RBI Bulletin October 2025 159ARTICLE State of the Economy Chart III.11: DCA Essential Commodity Prices a. Cereals b. Pulses Index (Jan 2024 = 100) Index (Jan 2024 = 100) 115 110 104.2 105 100 99.8 95 90 Wheat Rice Gram dal Tur/ Arhar dal Moong dal c. Edible Oils d. Vegetables Index (Jan 2024 = 100) Index (Jan 2024 = 100) Mustard oil Sunflower oil Groundnut oil Potato Onion Tomato Sources: Department of Consumer Affairs, GoI; and RBI staff estimates. Retail selling prices of petrol and diesel remained Table III.6: Petroleum Products Prices Remain unchanged in October (up to 17th). Kerosene prices Broadly Unchanged witnessed an increase while LPG prices remained Item Unit Domestic Prices Month-over- month unchanged (Table III.6). (per cent) Oct-24 Sep-25Oct-25^ Sep-25 Oct-25^ The PMIs for September recorded a pick-up Petrol ₹/litre 101.0 101.1 101.1 0.0 0.0 in the rate of expansion of both input and output Diesel ₹/litre 90.4 90.5 90.5 0.0 0.0 prices for manufacturing, with notable increase Kerosene ₹/litre 42.9 44.3 45.4 -0.5 3.4 (subsidised) in input prices for battery, cotton, electronic LPG (non- ₹/cylinder 813.3 863.3 863.3 0.0 0.0 component, and steel. In contrast, both input and subsidised) Notes: 1. ^: For the period October 1-17, 2025. selling prices for services firms decelerated due to 2. Other than kerosene, prices represent the average Indian Oil Corporation Limited (IOCL) prices in four major metros (Delhi, slowdown in the growth of new businesses and Kolkata, Mumbai and Chennai). For kerosene, prices denote the average of the subsidised prices in Kolkata, Mumbai and foreign sales (Chart III.12). Chennai. Sources: IOCL; Petroleum Planning and Analysis Cell (PPAC); and RBI staff estimates. 160 RBI Bulletin October 2025 42-naJ 42-rpA 42-luJ 42-tcO 52-naJ 52-rpA 52-luJ 52-tcO 110 105.5 94.0 90 76.6 70 42-naJ 42-rpA 42-luJ 42-tcO 52-naJ 52-rpA 52-luJ 52-tcO 129.3 130 120 120.6 110 100.7 100 90 42-naJ 42-rpA 42-luJ 42-tcO 52-naJ 52-rpA 52-luJ 52-tcO 250 200 117.5 150 100 112.9 50 70.5 0 42-naJ 42-rpA 42-luJ 42-tcO 52-naJ 52-rpA 52-luJ 52-tcOState of the Economy ARTICLE IV. Financial Conditions System liquidity remained in surplus during Overall financial conditions remained benign in the second half of September and in October (up October (up to 16th), after remaining mildly tight in to 16th), although an increase in government cash the latter half of September, primarily due to easing balances, driven by advance tax and GST collections, in the money, equity and corporate bond markets briefly pushed it into deficit during September 22-24. (Chart IV.1). Since then, government spending and the release of Chart IV.1: Benign Financial Conditions for India (Standard deviation from average since 2012) 1.0 0.8 0.6 0.4 0.2 0.0 -0.2 -0.4 -0.6 -0.8 -1.0 Money Government securities Corporate bond Equity Foreign exchange Financial conditions index (standardised) Note: The financial conditions index provides a metric based on its historical average; in this context, a zero value corresponds to a financial system operating at the historical average level of all the financial indicators included in the index. To present the results, a standardised index is used.24 Source: RBI staff estimates. 24 For detailed methodology see https://rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=23451 RBI Bulletin October 2025 161 52-naJ-10 52-naJ-71 52-beF-20 52-beF-81 52-raM-60 52-raM-22 52-rpA-70 52-rpA-32 52-yaM-90 52-yaM-52 52-nuJ-01 52-nuJ-62 52-luJ-21 52-luJ-82 52-guA-31 52-guA-92 52-peS-41 52-peS-03 52-tcO-61 Chart III.12: Input Cost Pressures Hardened for Manufacturing but Eased for Services Firms a. Manufacturing b. Services Index (50=No Change) Index (50=No Change) 60 55.1 55 53.7 50 45 Input Prices Output Prices Input Prices Prices Charged Note: A level of 50 corresponds to no change in activity, and a reading above 50 denotes expansion and vice versa. Source: S&P. Tighter conditions Easier conditions 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS 60 53.9 55 52.3 50 45 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peSARTICLE State of the Economy Chart IV.2: Liquidity Moderated amidst Tax Outflows (₹ 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 Marginal standing facility Variable rate repo Net liquidity adjustment facility Total absorption Source: RBI. primary liquidity from the 25 bps reduction in the monetary policy. For managing short-term/transient cash reserve ratio25 restored liquidity to surplus liquidity, the Reserve Bank would be primarily using conditions. Overall, average net absorption under the 7-day variable rate repo/ variable rate reverse the liquidity adjustment facility declined to ₹1.0 lakh repo.27 crore during September 16 to October 16, 2025, from Money Market ₹2.6 lakh crore in the preceding one-month period The WACR generally hovered around the policy (Chart IV.2). To offset the liquidity tightness during repo rate in September and October. It traded above this period, the Reserve Bank conducted 14 variable the policy rate during the latter half of September on rate repo auctions (overnight to 6-day maturity) to temporary tightness in liquidity demand due to tax inject liquidity and align overnight money market outflows. The WACR moved below the policy rate as rates with the policy repo rate. With overall liquidity liquidity conditions improved since the beginning of conditions in surplus, the average balances under October, prompting the RBI to conduct two variable the standing deposit facility remained elevated, and rate reverse repo auctions on October 9 and October banks’ recourse to the marginal standing facility 15, 2025. Overall, the WACR was aligned better with stayed low.26 the policy rate during September 16 to October 16, The Reserve Bank on September 30, 2025, 2025, as compared to the preceding one-month period announced the revised liquidity management (Chart IV.3a).28 Overnight rates in the collateralised framework. The overnight weighted average call rate (WACR) will remain as the operating target for the 27 The Reserve Bank will also use other variable rate repo/ variable rate reverse repo operations of tenors from overnight up to 14 days, based on the evolving liquidity conditions. Further details on the revised liquidity 25 Effective October 4, 2025 management framework are available at https://www.rbi.org.in/Scripts/ 26 Balances under the standing deposit facility increased to ₹1.4 lakh crore BS_PressReleaseDisplay.aspx?prid=61317#AN1 during September 16 to October 16, 2025 from that of ₹1.2 lakh crore in the 28 The average absolute deviation stood lower at 8.4 bps during the period preceding one-month period. Borrowings from the marginal standing facility September 16 to October 16, 2025, than that of 10.1 bps during the period stood at an average of ₹0.04 lakh crore during this period. August 16 to September 15, 2025. 162 RBI Bulletin October 2025 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-81 52-luJ-72 52-guA-50 52-guA-41 52-guA-32 52-peS-10 52-peS-01 52-peS-91 52-peS-82 52-tcO-70 52-tcO-61State of the Economy ARTICLE Chart IV.3: Money Market Rates Remained Stable a. Policy Corridor and Call Rate b. Money Market Rates (Per cent) (Per cent) 8.5 8.0 7.5 7.0 6.42 6.5 5.95 6.0 5.5 5.0 5.43 4.5 Repo rate Weighted average call rate Standing deposit facility Marginal standing facility 3-month treasury bill 3-month certificate of deposit SORR Rate 3-month commercial paper (NBFC) Sources: RBI; and Bloomberg. segments – as measured by the benchmark secured the average term spread (the difference between overnight rupee rate – largely moved in tandem with the yields of 10-year G-sec and 91-day treasury bill) the uncollateralised rate. Average yields on three- inched up marginally during September 16 to October month treasury bills eased while those on three- 17, 2025 (Charts IV.4a and IV.4b).32 month certificates of deposit and commercial papers Corporate Bond Market issued by non-banking financial companies hardened Corporate bond yields and their spreads over during this period (Chart IV.3b).29 The average risk government securities increased across tenors and premium in the money market (the spread between the rating spectrum (Table IV.1). Fresh issuances in the yields on 3-month commercial paper and 91-day corporate bonds moderated in August over July. On a treasury bill) increased.30 cumulative basis, total issuances were higher in the Government Securities (G-Sec) Market current financial year (up to August) compared to the In the fixed income segment, the shorter end of previous year.33 the yield curve declined during the second half of Money and Credit September and in October (up to October 17), while During October, reserve money growth34 yields at the longer end remained flat.31 Consequently, remained steady, tracking currency in circulation.35 29 The average yields on 3-month treasury bills eased by 4 bps while the 32 The average term spread between the 10-year G-sec and 91-day treasury yields on 3-month certificate of deposit and the 3-month commercial papers bill increased by around 2 bps during September 16 to October 17, 2025 as issued by NBFCs hardened by 1 and 11 bps respectively during the period compared to the period August 16 to September 15, 2025. September 16 to October 17, 2025, as compared to the period August 16 to 33 Declined to ₹0.43 lakh crore in August 2025, compared to ₹0.58 lakh September 15, 2025. crore in July 2025. On a cumulative basis (April to August), it was at ₹4.0 30 Increased to 99 bps during the period September 16 to October 17, 2025, lakh crore in 2025-26 as compared to ₹3.3 lakh crore in the corresponding from 84 bps in the preceding one-month period. period of the previous year. 31 The average yields on the benchmark 3-year government security and 34 Adjusted for the first-round impact of changes in the cash reserve ratio. 5-year government security eased by 11 and 13 bps respectively while the 35 Reserve money (adjusted for CRR) grew by 8.3 per cent (y-o-y) as on yields on benchmark 10-year security softened by 1 bps during the period October 10, 2025 [8.6 per cent (y-o-y) as on September 12, 2025]. Currency September 16 to October 17, 2025, as compared to the period August 16 to in circulation grew by 8.1 per cent (y-o-y) as on October 10, 2025 [8.7 per September 15, 2025. cent (y-o-y) as on September 12, 2025]. RBI Bulletin October 2025 163 52-naJ-42 52-beF-21 52-raM-30 52-raM-22 52-rpA-01 52-rpA-92 52-yaM-81 52-nuJ-60 52-nuJ-52 52-luJ-41 52-guA-20 52-guA-12 52-peS-90 52-peS-82 52-tcO-71 7.5 7.0 6.5 6.0 5.5 5.0 42-voN-92 42-ceD-31 42-ceD-72 52-naJ-01 52-naJ-42 52-beF-7 52-beF-12 52-raM-7 52-raM-12 52-rpA-4 52-rpA-81 52-yaM-2 52-yaM-61 52-yaM-03 52-nuJ-31 52-nuJ-72 52-luJ-11 52-luJ-52 52-guA-8 52-guA-22 52-peS-5 52-peS-91 52-tcO-3 52-tcO-71ARTICLE State of the Economy Chart IV.4: Short Term G-Sec Yields Moderated, Long Term Stable a. Movement in G-sec yield b. Term Spread (Per cent) (Percentage points) 7.3 7.0 6.7 6.51 6.4 6.13 6.1 5.99 5.8 5.5 3 year 5 year 10 year Note: In chart b, term spread is calculated as the difference between the 10-year G-Sec yield and the 3-month treasury bill yield. Sources: Bloomberg; and RBI staff estimates. Growth in money supply remained largely stable flow of financial resources to the commerical sector (Chart IV.5).36 increased, mainly due to an inrease in flow of non- food bank credit and flows from non-bank sources Credit growth in scheduled commercial including corporate bond issuances and foreign direct banks (SCBs) picked up, with the pace of credit investment to India.38 expansion outpacing deposit growth during the fortnight ended October 3, 2025 (Chart IV.6).37 Across key sectors, bank credit exhibited steady During 2025-26 so far (upto October 3, 2025), the growth in August,39 led by personal loans, services, Table IV.1: Increasing Corporate Bonds Yields and Spread Interest Rates Spread (bps) (Per cent) (Over Corresponding Risk-free Rate) Instrument August 16, 2025 – September 16, 2025 Variation August 16, 2025 – September 16, 2025 Variation September 15, 2025 – October 15, 2025 September 15, 2025 – October 15, 2025 1 2 3 (4 = 3-2) 5 6 (7 = 6-5) (i) AAA (1-year) 6.58 6.69 11 90 104 14 (ii) AAA (3-year) 7.02 7.05 3 94 108 14 (iii) AAA (5-year) 7.08 7.21 13 79 92 13 (iv) AA (3-year) 7.92 8.18 26 198 221 23 (v) BBB- (3-year) 11.32 11.86 54 566 590 24 Note: Yields and spreads are computed as averages for the respective periods. Source: FIMMDA. 36 Money supply grew by 9.6 per cent (y-o-y) as on October 3, 2025 [9.5 per cent (y-o-y) as on September 5, 2025]. 37 Credit growth of scheduled commercial banks was 11.4 per cent (y-o-y) as on October 3, 2025 [10.3 per cent (y-o-y) a month ago]. Deposit growth was 9.9 per cent (y-o-y) as on October 3, 2025 [9.8 per cent (y-o-y) a month ago]. The outstanding credit of scheduled commercial banks was at `192.7 lakh crore as on October 3, 2025 (`187.6 lakh crore a month ago). 38 During 2025-26 so far (up to October 3, 2025), the flow of non-food bank credit to the commercial sector increased by 16.7 per cent (y-o-y) [`1.5 lakh crore] vis-à-vis a decline by 11.1 per cent (y-o-y) [`0.7 lakh crore] a month ago. Total flow of financial resources to the commercial sector rose by 28.3 per cent (y-o-y) [`4.1 lakh crore] vis-à-vis 18.0 per cent (y-o-y) [`1.9 lakh crore] a month ago. 39 As at end-August, growth in non-food bank credit stood at 9.9 per cent (y-o-y), the same as in July 2025. Non-food credit data are based on fortnightly Section-42 return for the last reporting Friday of the month, which covers all scheduled commercial banks (SCBs). 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. 164 RBI Bulletin October 2025 52-naJ-42 52-beF-21 52-raM-30 52-raM-22 52-rpA-01 52-rpA-92 52-yaM-81 52-nuJ-60 52-nuJ-52 52-luJ-41 52-guA-20 52-guA-12 52-peS-90 52-peS-82 52-tcO-71 1.4 1.08 1.2 1.0 0.8 0.6 0.4 0.2 0.0 5202-naJ-42 5202-beF-21 5202-raM-30 5202-raM-22 5202-rpA-01 5202-rpA-92 5202-yaM-81 5202-nuJ-60 5202-nuJ-52 5202-luJ-41 5202-guA-20 5202-guA-12 5202-peS-90 5202-peS-82 5202-tcO-71State of the Economy ARTICLE Chart IV.6: Scheduled Commercial Banks: Credit Expansion Surpassing Deposit Growth (Y-o-y, per cent) 12 11.4 11 9.9 10 9 8 Credit growth Deposit growth Note: Scheduled commercial banks’ data are inclusive of regional rural banks. Source: Fortnightly Section 42 Returns, RBI. and industry (Chart IV.7).40 Personal loans continued for housing remained stable but softened for vehicle to demonstrate double digit growth. Credit growth loans segment. Credit to services sector remained 40 In terms of contribution to overall credit growth. RBI Bulletin October 2025 165 52-naJ-91 52-naJ-72 52-beF-40 52-beF-21 52-beF-02 52-beF-82 52-raM-80 52-raM-61 52-raM-42 52-rpA-10 52-rpA-90 52-rpA-71 52-rpA-52 52-yaM-30 52-yaM-11 52-yaM-91 52-yaM-72 52-nuJ-40 52-nuJ-21 52-nuJ-02 52-nuJ-82 52-luJ-60 52-luJ-41 52-luJ-22 52-luJ-03 52-guA-70 52-guA-51 52-guA-32 52-guA-13 52-peS-80 52-peS-61 52-peS-42 52-tcO-20 Chart IV.5: Expanding Reserve Money and Stable Money Supply (M ) 3 (Y-o-y, per cent) 12 11 10 9.6 9 8 8.3 7 6 5 4 Reserve money (CRR adjusted) Money Supply Source: RBI. 52-naJ-30 52-naJ-71 52-naJ-13 52-beF-41 52-beF-82 52-raM-41 52-raM-82 52-rpA-11 52-rpA-52 52-yaM-90 52-yaM-32 52-nuJ-60 52-nuJ-02 52-luJ-40 52-luJ-81 52-guA-10 52-guA-51 52-guA-92 52-peS-21 52-peS-62 52-tcO-01 Chart IV.7: Sectoral Deployment of Bank Credit (Y-o-y, per cent) a. Credit: Agriculture b. Credit: Industry 12 10 8 6.5 6 4 2 0 Notes: 1. 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. Data are provisional. The bank groups covered under the SIBC return are – Public Sector Banks, Private Sector Banks, Foreign Banks, and Small Finance Banks. 2. Data includes the impact of the merger of a non-bank with a bank. Source: RBI. 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA c. Credit: Services 16 14 12 10.6 10 8 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA d. Credit: Personal Loans 14 13 11.8 12 11 10 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 25 20 15 10 7.6 5 0 15 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guAARTICLE State of the Economy resilient. Non-Banking Financial Companies (NBFCs) in the fresh term deposit rates was driven by a − the largest recipient of bank credit within services moderation in interest rates on bulk deposits. Across sector − recorded a pick-up in growth, even as bank bank groups, the transmission to lending rates was credit to trade and commercial real estate decelerated higher for private banks than for public sector banks as compared to July 2025. Although credit to Micro, (Chart IV.8). On the deposit side, the pass-through Small and Medium Enterprise (MSME) segment was higher for public sector banks than for private softened marginally, it continued to be the prime banks. driver of robust credit growth in the industrial sector. The union government reviewed and kept Infrastructure segment observed a marginal uptick the rates on small savings schemes unchanged in credit growth. Agriculture sector registered an for Q3:2025-26. The prevailing rates on these improvement in credit growth. instruments exceed the formula-based rates.41 Deposit and Lending Rates Equity Markets In response to the 100 basis points repo During September and October, Indian equity rate cut during the current easing cycle, the markets exhibited bidirectional movements in weighted average lending rates on fresh and response to a host of domestic and global factors. outstanding rupee loans have declined by 58 bps Markets declined for eight consecutive sessions (71 bps on account of interest rate) and 55 bps, following the announcement of a steep hike in H-1B respectively (Table IV.2). On the deposit side, the visa fees and imposition of fresh sector-specific weighted average domestic term deposit rates on tariffs by the US. Thereafter, markets rebounded fresh and outstanding deposits moderated by 106 in early October supported by the Reserve Bank’s bps and 22 bps, respectively. The significant decline announcement of measures aimed at strengthening Table IV.2: Robust Transmission to Banks’ Deposit and Lending Rates (basis points) Term Deposit Rates Lending Rates Period Repo Rate WADTDR- WADTDR- EBLR 1-Year MCLR WALR - Fresh Rupee Loans WALR- Fresh Outstanding (Median) Outstanding Deposits Deposits Overall Interest Rate Rupee Loans Effect # (1) (2) (3) (4) (5) (6) (7) (8) (9) Tightening Period +250 259 206 250 175 182 191 115 May 2022 to Jan 2025 Easing Phase -100 -106 -22 -100 -40 -58 -71 -55 Feb 2025 to Aug 2025 Notes: Data on EBLR pertain to 32 domestic banks. #: The interest rate effect can be arrived at by keeping the weight constant, with the residual change in the weighted average lending rate attributed to the weight effect. WALR: Weighted Average Lending Rate; WADTDR: Weighted Average Domestic Term Deposit Rate; MCLR: Marginal Cost of Funds-based Lending Rate; EBLR: External Benchmark-based Lending Rate. Source: RBI. 41 Monetary Policy Report – October 2025, Chapter IV, RBI. 166 RBI Bulletin October 2025State of the Economy ARTICLE Chart IV.8: Robust Transmission across Bank Groups (February - August 2025) a. Lending Rates b. Deposit Rates (Basis points) (Basis points) 0 0 -20 -20 -17 -20 -40 -40 -47 -60 -53 -60 -63 -80 -80 -76 -84 -86 -100 -100 -99 -98 -107 -105 -120 -120 WALR WALR WADTDR WADTDR (Fresh rupee loans) (Outstanding rupee loans) (Fresh deposits) (Outstanding deposits) Public sector banks Private banks Foreign banks Public sector banks Private banks Foreign banks Note: Transmission during February to August 2025 is calculated by subtracting the weighted average lending and deposit rates of January 2025 from those of August 2025. Source: RBI. the resilience and competitiveness of the banking NIFTY 50) remained subdued, whereas primary sector, promoting ease of doing business and market activity picked up in September 2025.42 enhancing flow of credit. The gains were supported by External Sources of Finance DIIs who remained net buyers and FPIs who turned Gross inward foreign direct investment (FDI) net buyers in October (up to 16th) amidst renewed moderated in August (Chart IV.10a). Singapore, participation in primary equity market (Chart IV.9). Cayman Islands, the UAE, the Netherlands, and Growth in the secondary market (BSE Sensex and the US accounted for more than three-fourths of Chart IV.9: Domestic Equity Markets Remained Rangebound (Index, left scale; ₹ thousand crores, right scale) Note: FPI and DII flows are represented on a 15-days rolling sum basis. Sources: Bloomberg; and Capitaline. RBI Bulletin October 2025 167 42-peS 42-tcO 42-voN 42-veD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS 52-tcO 88000 90 85000 83,952 75 82000 60 79000 45 76000 30 73000 15 70000 67000 0 64000 -15 BSE Sensex (LHS) FPI + DII flows (RHS) 42 The primary market issuances (including Initial Public Offers, Follow-on Public Offers and Offer for Sale) increased from `10,454 crore in August 2025 to `13,302 crore in September 2025, as the number of issuances increased from 12 to 25 during this period (Source: Prime Database)ARTICLE State of the Economy Chart IV.10: Muted Foreign Direct Investment Flows a. Gross and Net FDI b. Country-Wise Outward FDI (US$ billion) (US$ billion) 15 10 6.0 5 0 -0.6 -5 -10 Net outward FDI Repatriation/Disinvestment Gross FDI Net FDI Source: RBI. total inflows. Manufacturing, computer services, The registrations of external commercial construction, and financial services were the borrowings moderated during April-August 2025.43 top recipient sectors. Net FDI turned negative in Despite this slowdown, net inflows remained August, due to a moderation in gross inflows and positive at US$ 6.0 billion, as inflows continued to an increase in repatriation. Outward FDI also outpace repayments (Chart IV.12). Notably, 39 per declined in August. These investments were mainly cent of the total external commercial borrowing directed towards financial, insurance and business loans registered during this period were earmarked services, and manufacturing sectors, with Singapore, for capital expenditure. the UAE, and the US being the major destinations (Chart IV.10b). Net foreign portfolio investment flows continued to remain negative for the third consecutive month in September (Chart IV.11). This was driven by equity outflows amidst weak investor sentiments on concerns over US tariff measures and the steep hike in H-1B visa fees. In contrast, the debt segment continued to record net inflows, supported by expectations of US rate cut and favourable yield differentials. In October so far (up to October 15), net foreign portfolio investment turned positive on renewed investor’s optimism amidst expected revival in corporate earnings and improved valuations. 168 RBI Bulletin October 2025 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA Singapore UAE US Sri Lanka Netherlands Mauritius 0 0.2 0.4 0.6 Chart IV.11: Foreign Portfolio Investments Showed Early Signs of Recovery (US$ billion) 15 10 5 2.2 0 -5 -0.8 -10 -15 Equity Debt Total Notes: 1. Debt also includes investments under the hybrid instruments. 2. *: Data up to October 15, 2025. Source: National Securities Depository Limited (NSDL). 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS *52-tcO 43 Moderated to US$ 15.7 billion, compared with US$ 20.6 billion in the same period a year ago.State of the Economy ARTICLE Chart IV.12: External Commercial Borrowings – Registrations Eased but Inflows Stayed Positive (US$ billion) 22 20.6 18 15.7 14 10 6.2 6.0 6 3.3 3.3 2 1.2 -0.2 -2 Source: Form ECB, RBI. India’s foreign exchange reserves remained External debt to GDP ratio, short-term debt to adequate, providing a cover for more than 11 reserves ratio and reserves to external debt ratio months of goods imports and for about 93 per cent turned favourable (Chart IV.14). India’s external debt of the external debt outstanding at end-June 2025 rose by US$ 11.2 billion to US$ 747.2 billion during (Chart IV.13).44 this period. India’s key external vulnerability indicators India’s net International Investment Position improved between end-March to end-June 2025. improved during Q1:2025-26 (Chart IV.15).45 This 44 The import cover for goods and services was around nine months. 45 Improved by US$ 16.4 billion and stood at US$ (-) 312.8 billion. RBI Bulletin October 2025 169 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 4202 guA-rpA 5202 guA-rpA Chart IV.13: Adequate Foreign Exchange Reserves in India (US$ billion, left scale; months, right scale) Notes: 1. *: As on October 10, 2025. Registrations Net inflows 2. The import cover data is based on annualised merchandise imports as per the balance of payments statistics. Source: RBI. 8.796 750 12.5 12.0 650 11.4 11.5 550 11.0 10.5 450 10.0 350 9.5 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD 52-raM 52-nuJ 52-peS *52-tcO Foreign exchange reserves (LHS) Import cover (RHS) Chart IV.14: India’s External Vulnerability Indicators Improved 120 100 An increase means An increase means higher vulnerability lower vulnerability 80 60 40 20 0 -20 -40 External Short-term Debt Reserves to Reserve Net IIP to Debt to Debt (RM) Service ratio External Cover of GDP ratio GDP ratio to Reservesratio Debt ratio Imports(months) March 2013 March 2024 March 2025 June 2025 Source: RBI.ARTICLE State of the Economy Chart IV.15: Net International Investment Position Strengthened (US$ billion, left scale; US$ billion, right scale) 800 747 -300 698 -313 -320 600 -340 400 -360 200 -380 0 -400 Source: RBI. improvement was driven by higher accumulation of Foreign Exchange Market overseas financial assets by Indian residents relative The Indian rupee depreciated against the US to the foreign-owned assets in India. As a result, the dollar in September amidst elevated trade tensions, ratio of India’s international assets to international liabilities improved to 79.2 per cent in June as heightened global uncertainties, and persistent compared to 77.6 per cent in March. foreign portfolio investment outflows (Chart IV.16). 170 RBI Bulletin October 2025 3202-nuJ 3202-peS 3202-ceD 4202-raM 4202-nuJ 4202-peS 4202-ceD 5202-raM 5202-nuJ External Debt (LHS) Reserve Assets (LHS) Net IIP (RHS) Chart IV.16: Movements in Major Currencies against the US Dollar in September (Per cent, m-o-m, left scale; per cent, right scale) 2.0 2 1.5 1.0 1 0.5 0.0 0 -0.5 -1.0 -1 -1.5 -0.9 -2.0 -2 Notes: 1. Appreciation/depreciation (m-o-m) calculated using monthly average exchange rates. 2. The US dollar (DXY) measures the movements of the US dollar against a basket of major currencies (Euro, Japanese yen, British pound, Canadian dollar, Swedish krona, Swiss franc). 3. For each currency, volatility is measured as the coefficient of variation (100*Standard Deviation/Mean) using daily exchange rate data for September 2025. Sources: FBIL; Thomson Reuters; and RBI staff estimates. )YXD( ralloD SU xednI ycnerruC EME dnar nacirfA htuoS laer nailizarB thab dnaliahT osep nacixeM oruE nauy esenihC rallod gnoK gnoH tiggnir naisyalaM dnuop KU ney esenapaJ now naeroK osep enippilihP gnod esemanteiV eepur naidnI haipur naisenodnI Percentage change (+ appreciation/ - depreciation) (LHS) Volatility (RHS)State of the Economy ARTICLE Chart IV.17: 40-Currency Real Effective Exchange Rate Depreciated a. Monthly Changes b. Decomposition of Monthly Changes (Index (2015-16 = 100), left scale; per cent, right scale) (Per cent) 110 4 108 106 2 104 102 97.6 100 0 98 96 -1.2 -2 94 92 90 -4 Note: Positive change indicates an appreciation of the nominal and real exchange rate and negative change indicates a depreciation. Source: RBI. In real effective terms too, the Indian rupee is not immune to global headwinds, it has so far depreciated in September (Chart IV.17a). The exhibited resilience, driven by a focus on strong and depreciation in the real effective exchange rate was durable macroeconomic fundamentals – including mainly driven by the depreciation in the nominal low inflation, robust balance sheets of banks and effective exchange rate (Chart IV.17b). corporates, adequate foreign exchange reserves and a credible monetary and fiscal framework. V. Conclusion As noted in the Monetary Policy Committee Trade tensions have started to simmer yet again. resolution of October 1, 2025, the growth outlook In the context of rising protectionism in the US, remains resilient, supported by domestic drivers, and rising fiscal risks in AEs, IMF’s October World despite uncertainties on the external front. Domestic Economic Outlook talks about ‘a new global economic structural reforms are helping to somewhat offset landscape slowly takes shape’.46 The state of flux of the drag on growth from the weakening external the global economy and policies present considerable demand conditions.47 The current macroeconomic uncertainties to the macroeconomic outlook. In conditions and the outlook, as noted by the MPC, this scenario, the need for economic resilience has has opened up policy space for further supporting become a key priority. While the Indian economy growth. RBI Bulletin October 2025 171 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS 4 2 0 -1.0 -1.2 -2 -4 Change in REER (RHS) REER (LHS) 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 52-yaM 52-nuJ 52-luJ 52-guA 52-peS Relative price effect Change in REER Nominal exchange rate effect 47 Real GDP growth for 2025-26 has been revised upwards by 30 bps to 6.8 per cent in the October 1, 2025, MPC resolution from the projection of 6.5 per cent in the August 6, 2025, resolution. CPI inflation projection for 2025-26 has been revised downwards by 50 basis points to 2.6 per cent from 46 World Economic Outlook, Chapter 1 “Global Prospects and Policies”. the earlier 3.1 per cent.Resilience and Revival: India’s Private Corporate Sector ARTICLE Resilience and Revival: India’s caused an economic downturn of historic proportions, leading to a 3.0 per cent decline in global GDP in 2020 Private Corporate Sector (IMF, 2022). Governments worldwide implemented lockdowns, travel restrictions, and social distancing by Snigdha Yogindran, Sukti Khandekar, measures to curb the spread of the virus, further Rajesh Kavediya and Kamal Gupta^ straining economies. The crisis was exacerbated by the Russia-Ukraine war, which disrupted supply India’s private corporate sector showed a strong chains and fuelled inflation. post-COVID recovery, led by manufacturing and non- India’s economy also suffered a significant IT services companies. Despite pandemic-related stress, setback, with GDP contracting by 23.8 per cent in large firms sustained high profitability, while medium Q1:2020-21, one of the steepest declines in the and small firms enhanced their debt servicing. This history. The corporate sector, especially contact- article analyses trends using financial data of listed non- intensive industries, faced severe disruptions due to government non-financial companies. Operating profit restrictions on movement and operations. Sales of margins remained stable, supported by efficient cost private manufacturing and non-IT services sectors control. Balance sheet analysis indicates deleveraging, contracted sharply by 41 per cent in Q1:2020-21. with financial improvement among vulnerable However, timely policy interventions by the Indian manufacturing firms. The study underscores the sector’s government and the Reserve Bank of India (RBI) resilience and adaptability, with large firms driving facilitated a swift recovery. earnings and smaller ones improving financial stability— The RBI undertook various measures numbering signalling a stronger, more balanced corporate landscape more than a hundred in total, some conventional and in the aftermath of the pandemic. others out-of-the-box, to address pandemic-induced Introduction dislocations and constraints, both system level and India’s corporate sector faced multiple economic also specific to sectors, institutions and financial shocks, from COVID-19 to geopolitical tensions. instruments (Patra, 2022). These includes, inter alia, (i) Despite challenges, it adapted swiftly, ensuring cumulative reduction in policy repo rate by 250 basis business continuity and economic recovery. The global points (bps) with reserve repo rate reduced by 155 economy has faced several major disruptions over the bps, (ii) reduction in cash reserve ratio by 100 bps, (iii) past few years, including the COVID-19 pandemic, increase in bank’s access to liquidity under marginal geopolitical tensions, and rapid synchronised monetary standing facility from 2 per cent to 3 per cent of net policy tightening. These events have tested economic demand and time liabilities (NDTL), which resulted resilience worldwide, and India was no exception. in liquidity enhancement of about ₹1.37 lakh crore, Economies across the world have experiences many (iv) conduct of long-term repo operations (LTROs) crises in the past, however, the COVID-19 pandemic and targeted long-term repo operations (TLTROs) to induced shock was very intense due its widespread augment systemic liquidity and lower the banks’ cost impact on both private and public segments of the of funds, (v) moratorium of three months on term economy (Mather, 2020; Kells, 2020). The pandemic loans and easing of working capital financing, etc. The nuanced and calibrated measures by the RBI and ^ The authors are from the Department of Statistics and Information the government and adaptation by businesses and Management. They are grateful to Shri Ravi Shankar, Adviser, DSIM for his guidance and suggestions. The views expressed in the article are personal households to working in a pandemic environment views of the author(s) and do not represent the views of the Reserve Bank of India. resulted in faster recovery than expected. RBI Bulletin October 2025 173ARTICLE Resilience and Revival: India’s Private Corporate Sector As, the private corporate sector plays a critical role II. Corporate Performance: COVID-19 Impact and in driving investment, employment, productivity, and Recovery overall economic growth, understanding the sector’s The pandemic led to a sharp decline in sales response to unprecedented shocks—such as the and profitability of corporates, but policy support COVID-19 pandemic, global supply chain disruptions, and resilient strategies fuelled a strong comeback. and subsequent fiscal-monetary measures—is The corporate sector’s ability to adapt was a key essential for assessing the broader trajectory of to its revival. India’s private corporate sector has economic recovery and financial stability. experienced significant shifts in performance between Against this backdrop, this article is motivated by the pre-COVID and post-COVID periods1, reflecting the need to evaluate how India’s private non-financial underlying dynamics of economic conditions. corporates adapted to these shocks, and whether II.1 Sales Performance: Rebuilding Momentum – the recovery was broad-based and sustainable across Corporate Sales Surge Post-Pandemic sectors and firm sizes. From a macroeconomic Sales rebounded sharply post-pandemic, peaking standpoint, the findings help assess the corporate at 32.5 per cent growth in 2021-22 before stabilising. sector’s preparedness to support future investment Non-IT services and manufacturing led the recovery, cycles, the evolving risks to financial stability, and while IT sector growth remained steady. During the structural shifts in profitability dynamics and cost efficiencies. pre-COVID period, the listed private non-financial corporates, at aggregate level, enjoyed steady growth The article examines the performance of India’s before 2019-20, driven by robust consumption private corporate sector during the COVID-19 demand, favourable economic policies, and stable pandemic and in the post-pandemic recovery phase macroeconomic conditions. Sales growth showed across different sectors and firm sizes. The article a steady increase from 3.1 per cent in 2016-17 to 14 also explores the role of cost management, policy per cent in 2018-19, aligning with steady increase support, and sector-specific dynamics in sustaining in commodity prices. This steady growth in sales profitability and improving debt serviceability in is also characterized in manufacturing and non- the aftermath of pandemic shocks. The influence of IT service sector (Chart 1 and Annex Table A1, A2). sales growth on operating profit margin in the Indian However, during 2019-20, due to weak domestic and manufacturing sector has also been examine under external demand, sales of listed NGNF companies the panel regression framework, and how has this contracted, mainly dragged by subdued performance relationship evolved in the post-COVID period. The of manufacturing companies. analysis finds that the corporate sector rebounded quickly and widely with varying speed of recovery. The onset of COVID-192 brought unprecedented The evidence indicates that while large firms led the challenges, including localised and regional lockdowns, rebound in profitability, medium and small firms supply chain disruptions, changes in consumer recorded notable improvement in debt serviceability and operational efficiency, pointing to a more 1 Indian corporate sector was impacted severely during the first wave of COVID-19 and not affected much during the second wave. Accordingly, for balanced corporate landscape. From a macroeconomic the analysis purpose, study period has been split into three phases - (i) Pre-COVID period (2016-17 to 2019-20), (ii) COVID period (2020-21), and perspective, the sector’s improved balance sheet (iii) Post-COVID period (2021-22 to 2024-25). position it as an important contributor to India’s 2 Financial year 2020-21 is taken as the COVID period as the first lockdown medium-term growth momentum, while also reducing in India was implemented from March 25, 2020. Further, financial year 2021-22 is included in the post-COVID period as the companies started to systemic vulnerabilities in the financial system. rebound and were not much impacted by the second wave of COVID-19. 174 RBI Bulletin October 2025Resilience and Revival: India’s Private Corporate Sector ARTICLE Chart 1: Sales Growth (Per cent) 40 30 20 10 0 -10 -20 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Pre - COVID COVID Post - COVID IT Manufacturing Services (non-IT) Aggregate Sources: Capitaline database; and RBI staff estimates. behaviour, and operational hurdles. The overall to 7.2 per cent, led by improvement in all the major performance of corporate sector worsened further sectors. with continued contraction in sales of manufacturing II.2 Spending Smart: How Companies Managed sector and set backing non-IT services sector. The Costs for Survival and Growth contact-intensive services sector was impacted Companies managed costs effectively during severely due to pandemic with sales contracting by the downturn, with lower raw material and staff 14.6 per cent in 2020-21. costs helping offset losses. Post-pandemic, expenses With the fiscal-monetary policy induced support, surged in line with the pick-up in sales growth and post-pandemic pent-up demand, and improved reversal in commodity prices. Expense growth of consumer confidence, corporate sector witnessed a listed NGNF companies broadly tracks the sales remarkable recovery, with aggregate nominal sales growth across the major sector as well as at aggregate growth peaking at 32.5 per cent during 2021-22, partly level. During COVID, the expenditure at aggregate due to favourable base effect. Aggregate sales growth level contracted at a higher pace compared to sales, moderated to 19.8 per cent in the subsequent year. mainly due to contraction in raw material costs, along Post-COVID, all the major sectors rebounded strongly, with significant moderation in staff costs growth. with non-IT service sector showing the highest growth, Contraction in expenditure is primarily contributed followed by manufacturing and IT sectors, reflecting a by manufacturing and non-IT services companies. In broad-based recovery and increased economic activity contrast, total expenses of IT companies exhibited positive growth, although at a slower pace, driven by across the board. However, with the fading of pent-up healthy growth in staff cost, with staff cost to sales demand and normalisation of activities and ebbing of ratio remaining slightly lower than 50 per cent. commodity prices, corporate sales growth moderated significantly to 4.7 per cent during 2023-24 over the As the economic activities gained traction during high base growth. Momentum remained upbeat post-COVID period, in tandem with the sharp recovery during 2024-25 with aggregate sales growth improving in the corporates sales, as alluded earlier, and reversal RBI Bulletin October 2025 175ARTICLE Resilience and Revival: India’s Private Corporate Sector Chart 2: Expenditure Growth (Per cent) 50 40 30 20 10 0 -10 -20 -30 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Pre - COVID COVID Post - COVID IT Manufacturing Services (non-IT) Aggregate Sources: Capitaline database; and RBI staff estimates. of commodity cycle growth, the raw material cost at growth, expenses expanded at a modest pace, in aggregate level surged sharply (47.6 per cent in 2021- tandem with slowdown in sales growth (Chart 2). 22) post-COVID. The staff expenses also recorded Consequently, on an average, the cost of raw double digit growth during 2021-22 and 2022-23, after material (CRM) to sales ratio during the post-COVID remaining muted during 2020-21. Consequently, total period remained higher than the pre-COVID levels. expenditure increased significantly during 2021-22 On the other hand, the staff cost to sales ratio, which and 2022-23. However, in subsequent period, with increased during the pandemic, returned back to its deceleration in raw material cost and staff costs pre-COVID levels, on an average (Chart 3). The input Chart 3: Raw Material and Staff Cost (Per cent of Sales) (Per cent, left scale; per cent, right scale) 20 60 55 15 50 10 45 40 5 35 0 30 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Pre - COVID COVID Post - COVID Staff cost to sales Cost of raw material to sales (RHS) Sources: Capitaline database; and RBI staff estimates. 176 RBI Bulletin October 2025Resilience and Revival: India’s Private Corporate Sector ARTICLE costs, as percentage of sales, varied across the sectors. significant contraction in net profit at aggregate level, For instance, for manufacturing sector, raw material due to weak domestic and global demand, resulted in cost to sales hovered around 50 per cent, while staff sharp moderation in net profit margin to 3.1 per cent cost remained major component of expenditure from 7.3 per cent during the previous year, primarily for the IT companies, with staff cost to sales ratio dragged by non-IT services sector companies (Chart 4 remained close to 50 per cent. and Annex Table A1, A2). II.3 Turning Challenges into Profits: Corporates’ During COVID, despite contraction in sales, Financial Resurgence decline in raw material cost due to softening of Despite initial setbacks, profitability improved commodity prices, subdued wage growth, along with during post-COVID due to effective cost management the favourable base effect, net profit at aggregate level and demand recovery. Large firms led the way, while rose sharply by 115.6 per cent. Consequently, net smaller firms also strengthened their financial footing. profit margin surpassed its pre-COVID level. During pre-COVID period, barring the financial year During post-COVID period, with sharp rebound in 2019-20, even though high variability seen in net sales growth led by pent-up demand, corporates’ profit profit growth ((-) 0.3 per cent in 2017-18 to 36.2 per increased significantly from Rs. 2.5 trillion in 2020- cent in 2018-19) of listed NGNF companies, led by 21 to Rs. 7.1 trillion during 2024-25. Consequently, non-operating income , net profit margins showed an net profit margins improved and reached to double increasing trend from 6.5 per cent in 2016-17 to 7.3 per cent in 2018-19, indicating improved efficiency in digit level in 2024-25, driven by manufacturing sector. converting revenue into profit. Consistent growth at While net profit margin of IT sector moderated during aggregate level was predominantly led by relatively post-COVID period due to slowdown in activities stable and improving performance of manufacturing coupled with higher salary outgo, net profit margin sector. In contrast, the non-IT services sector of non-IT service sector remained into negative zone exhibited swings in net profit growth, due to volatile since COVID before returning into positive territory income from non-operating activities. During 2019-20, in 2023-24. Chart 4: Net Profit Margin (Per cent) 30 20 10 0 -10 -20 -30 -40 -50 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Pre - COVID COVID Post - COVID IT Manufacturing Services (non-IT) Aggregate Sources: Capitaline database; and RBI staff estimates. RBI Bulletin October 2025 177ARTICLE Resilience and Revival: India’s Private Corporate Sector Chart 5: Operating Profit Margin (Per cent) 24 30 22 25 20 20 18 15 16 10 14 5 12 10 0 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Pre - COVID COVID Post - COVID Manufacturing Services (non-IT) Aggregate IT (RHS) Sources: Capitaline database; and RBI staff estimates. In contrast to the net profit margin, operating COVID-19 pandemic led to disruptions in global profit margin exhibited relatively lower volatility at economic activity impacting not only the lives but aggregate level, though operating profit margin of also livelihoods. The Indian industry too faced non-IT sector remained volatile – from 19.2 per cent disruptions in business activity leading to slowdown in 2016-17 to the low of 11.7 per cent in 2018-19 and in its performance. bounced back to a high of 22.4 per cent in 2023-24. At Weak domestic economic activity underpinned aggregate level, benefiting from the lower input cost, by sluggish private consumption led to significant operating profit margin improved by more than 200 slowdown in nominal gross value added (GVA) of bps during COVID period from average margin seen listed NGNF companies to 0.7 per cent growth in during the pre-COVID period. However, with fading 2019-20 from 11.7 per cent in the previous year, which off COVID led pent-up demand and rising commodity was mainly dragged by contraction (-7.0 per cent) in prices, corporates were able to pass on the rising GVA of listed private manufacturing companies3. input cost partially to their customers, as reflected As per national accounts statistics, nominal GVA in moderating operating profit margin during post- of manufacturing sector contracted by 3.8 per cent COVID period (Chart 5). during 2019-20. During COVID, various monetary and fiscal supportive policy initiatives helped industries II.4. Value Added by Private Corporates - Beyond such as ‘Iron and Steel’, ‘Precious and Non-Ferrous Survival: How Businesses Drove Economic Value in Metals’, ‘Pharmaceuticals and Medicines’, ‘Food Tough Times products and Beverages’, ‘Cement and Cement Global economy, including India, hit hard by Products’, and ‘Chemical and chemical products’ to multiple shocks – (i) COVID induced supply chain remain resilient. However, within services sector, due disruptions and halting of economic activities to severe slowdown in contact-intensive industries resulting into loss of output, (ii) Russia-Ukraine such as ‘Hotel and Restaurant’, ‘Transport and Storage war triggering to a worldwide surge in inflation, Services’, ‘Hospital Services’ and ‘Real Estate’, their and (iii) synchronised policy rate hikes by the 3 GVA of listed private manufacturing companies accounts for around 23 central banks across economies to curb inflation. per cent share, on an average, in nominal GVA manufacturing sector (NSO). 178 RBI Bulletin October 2025Resilience and Revival: India’s Private Corporate Sector ARTICLE Chart 6: GVA Growth of Various Indutries during COVID Pandemic (Per cent) Computer and Related Activities Wholesale and Retail Trade Video and Television Programming and Broadcasting Transport and Storage Services Telecommunication Real Estate Other Services Hotel and Restaurant Hospital Services Business Support Services Textiles Rubber and Rubber Products Precious and Non-Ferrous Metals Plastic Products Pharmaceuticals and Medicines Petroleum Products Motor Vehicles and Other Transport Equipments Jewellery and Related Articles Iron and Steel Food Products and Beverages Electrical Machinery and Apparatus Chemicals and Chemical Products Cement and Cement Products -80 -60 -40 -20 0 20 40 60 80 Sources: Capitaline database; and RBI staff estimates. output contracted by 5.3 per cent during 2020-21. In ‘Petroleum Products’, ‘Iron and Steel’, and ‘Motor contrast, nominal GVA of IT companies rose by 6.7 Vehicles and Other Transport Equipment’, with many per cent during COVID due to adoption of work-from- industries surpassing the pre-COVID average sales home culture (Chart 6 and Annex Table A1, A2, A4). growth. However, operating profit margins showed mixed results—industries like ‘Precious & Non- Overall, the Indian corporate sector sailed well Ferrous Metals’, ‘Petroleum Products’, and ‘Cement through the pandemic recording faster recovery. Post- and Cement Products’ saw margins decline compared pandemic, nominal GVA experienced a significant to pre-pandemic levels (Chart 7). increase in 2021-22, fuelled by improved sales driven by pent-up demand and higher profits. The IT sector Before COVID, industries such as ‘Iron & Steel’, saw a considerable rise in GVA, with staff cost growth ‘Petroleum Products’, ’Chemicals and Chemical quadrupling from the previous year. In the non-IT Products’, and ‘Cement and Cement Products’ sector, recovery in GVA growth was primarily driven outperformed the sector average in both sales by a lowering of losses. growth and profit margins. In contrast, Electrical Machinery, Textiles, and Food Products consistently II.5. Industry-wise analysis within Manufacturing underperformed. During COVID period, depending Sector - Winners and Laggards: How different sectors upon the underlying demand conditions, pricing fared post-COVID power and firms’ specific characteristics, financial Industries within manufacturing sector recovered performance of industries altered significantly. During at different paces, with industries like ‘Petroleum’ post-pandemic period, even though industries such as and ‘Motor Vehicles and Other Transport Equipment’ ‘Petroleum’, and ‘Motor Vehicles and Other Transport (also called as ‘Automobiles’) bouncing back Equipment’ recorded higher sales growth, their profit strongly. However, profit margins varied, reflecting margin remained lower than that of manufacturing industry-specific challenges. Impact of pandemic sector. In contrast, ‘Pharmaceutical’ industry was able and subsequent recovery varied across industries to achieve higher profit margin despite lower sales within the manufacturing sector. Manufacturing growth. ‘Food Products’ and ‘Textiles’ remained as a sales growth was mainly led by industries such as laggard industry (Chart 8). RBI Bulletin October 2025 179 TI )TI-non( secivreS gnirutcafunaMARTICLE Resilience and Revival: India’s Private Corporate Sector Chart 7: Sales Growth and Operating Profit Margin of Manufacturing Industries a: Sales Growth b: Operating Profit Margin (per cent) (per cent) Textiles Textiles Precious and Non-Ferrous Metals Precious and Non-Ferrous Metals Pharmaceuticals and Medicines Pharmaceuticals and Medicines Petroleum Products Petroleum Products Motor Vehicles and Other Motor Vehicles and Other Transport Equipments Transport Equipments Iron and Steel Iron and Steel Food Products and Beverages Food Products and Beverages Electrical Machinery and Electrical Machinery and Apparatus Apparatus Chemicals and Chemical Products Chemicals and Chemical Products Cement and Cement Products Cement and Cement Products 0 510 15 20 25 0 5 10 15 20 25 Post-COVID Pre-COVID Post-COVID Pre-COVID Sources: Capitaline database; and RBI staff estimates. Thus, industry-wise profitability analysis reveals sales growth along with higher profitability, other that while some industries were able to achieve higher industries were able to maintain the sales growth by Chart 8: Industry-wise Sales Growth and Operating Profit Margin (Operating pro(cid:19)it margin (Per cent), x-axis; Sales growth (Per cent), y-axis) a. Pre-COVID Averages b. COVID Period 14 20 Manufacturing OPM (16.1 %) Manufacturing OPM (14.3%) 15 12 Iron and Steel 10 Pharmaceuticals 1 80 Pet Cr eo mleu enm t Manufacturing Sales Growth 05 AutoF mo oo bd i lP er soducts ChemicalNon-Fe Cr Ir reo omu ns e anM nt det Sa tls eel 6 ChemicalPharmaceuticals (5.9%) -5 Electrical Machinery Manufacturing Sales Growth (-2.8 %) Automobiles Non-Ferrous Metals -10 4 Electrical Machinery -15 Textiles 2 Food Products -20 0 Textiles -25 Petroleum -30 -2 -35 0 5 10 15 20 25 30 0 5 10 15 20 25 30 c. Post-COVID Averages 30 Manufacturing OPM (14.5 %) 25 Petroleum Automobiles 20 Electrical Machinery Non-Ferrous Metals 15 Textiles Iron and Steel Manufacturing Sales Growth (16.1 %) Chemical Food Products 10 Cement Pharmaceuticals 5 0 0 5 10 15 20 25 30 Note: The dotted vertical and horizontal lines indicate the average operating profit margin and sales growth of the manufacturing sector, respectively, across different COVID phases. Sources: Capitaline database; and RBI staff estimates. 180 RBI Bulletin October 2025Resilience and Revival: India’s Private Corporate Sector ARTICLE taking hit on their profit margins. This underlines sector, the operating profit margin exhibits a positive the importance of firm specific characters that relationship with sales growth for listed private have played role in profitability dynamics since the corporates. This trend is observed in industries such pandemic. Industry level panel analysis suggests that as ‘Pharmaceuticals and Medicines’, ‘Precious and corporates were able to maintain their profit margin Non-Ferrous Metals’, ‘Iron and Steel’ and ‘Chemicals with higher sales growth. Within manufacturing and Chemical Products’ (Box 1). Box 1: Exploring operating profit margin dynamics in the Indian manufacturing sector The trade-off between sales growth and operating The cross-sectional (CD) dependence test (Pesaran, profit margin is a critical consideration for businesses 2004) points to existence of cross-sectional dependence. striving to balance expansion with profitability. While Accordingly, a second-generation unit root test developed rapid sales growth can drive market share and revenue, by (Pesaran, 2007) known as cross-sectional augmented it often requires significant investment in marketing, Im, Pesaran, and Shin (CIPS) was performed to avoid infrastructure, and product development, which can erode spurious results. profit margins. Conversely, focusing on maintaining or Lastly, considering the presence of cross-sectional increasing operating profit margins may necessitate cost- dependence in the data, feasible generalised least square cutting measures or price adjustments that could slow (FGLS) model was employed, which also take into account down sales growth. serial correlation and heteroscedasticity. The FGLS method To empirically analyse the relationship between is a static panel technique applicable for N T, where N operating profit margin and sales growth, quarterly is the number of cross-sections and T is the number of < time periods. financial performance data on 11 major industries4 within manufacturing sector consisting of around 1,130 To address endogeneity, a two-stage least square listed private non-financial companies have been used, approach was implemented within framework of FGLS covering the period from Q1:2018-19 to Q4:2024-25. model. Balanced panel data framework has been deployed. To Baseline model control for the industry specific characters, asset turnover ratio (ATR), staff cost to sales ratio, raw material cost to OPM it β β Sales growth sales ratio were included in the model. Further, to control 0 β 1ATR it β Sta if t f cost to sales it = + for overall macroeconomic conditions, manufacturing β 2Raw mat 3erial cost to sales it + + gross value added (GVA) growth (nominal) and wholesale β 4WPI Manufacturing inflation it + price index (WPI) manufacturing inflation were used as β 5GVA Manufacturing growth it + β COVID dummy exogenous variables. The variables used in the analysis 6 + β post COVID dummyX Sales Growth γ are described in the Annex Table A5. 7 it i it + While the correlation test shows strong positive i+ 8 t T + + ε , partial correlations of sales growth with GVA growth and in which i =co 1r,r…es,pNo;nd=s 1t,o… ,industry in a sample and t WPI inflation among the exogenous variables (Annex refers to the quarter. γ represents industry fixed effects. i Chart 1), the variance inflation factor (VIF) analysis Model specification was also augmented with COVID confirms that no serious multi-collinearity among the related dummy to disentangle the impact of pandemic, variables. which takes value 1 during the periods Q4:2019-20 to (Contd.) 4 Based on 11 major industries, that is, textile, petroleum, chemical products, pharmaceuticals, iron & steel, electrical machinery & apparatus, cement & cement products, food products & beverages, and precious & non-ferrous metals, parts & other transport equipments, and motor vehicle accounting for cumulative share of around 85 per cent in sales of manufacturing companies. RBI Bulletin October 2025 181ARTICLE Resilience and Revival: India’s Private Corporate Sector Q4:2020-21, and 0 otherwise. Post COVID dummy takes Table B1: Impact of Sales Growth on OPM value 1 for the periods Q1:2021-22 to Q4:2024-25 and 0 Parameters Coefficient Standard z-value otherwise. The interaction of sales growth with the post- Estimate Error COVID dummy variable reflects how sales growth have Sales growth 0.11 0.01 10.84*** influenced operating profit margins (OPM) during post- Asset turnover ratio -0.03 0.03 -1.06 pandemic period. Staff cost to sales ratio 0.63 0.35 1.82* Cost of raw material to sales ratio -0.13 0.05 -2.43** The Wald test revealed that the industry-specific WPI manufacturing inflation -0.05 0.03 -1.44 effects are jointly significantly influencing the operating GVA manufacturing growth 0.02 0.01 1.67* profit margin. Empirical findings suggest that sales COVID dummy variable 0.71 0.36 1.97** growth have positive and statistically significant impact Sales growth (y-o-y)* Post COVID -0.09 0.01 -9.50*** on the OPM. This indicates that firms’ high sales growth Dummy is typically associated with improvement profitability. Constant 17.81 3.84 4.64*** However, the coefficient of sales growth interacted with ***p<0.01, **p<0.05, *p<0.1 Sources: Capitaline database; and RBI staff estimates. post-COVID dummy is estimated to be negative, possibly References: indicating that during post-COVID period, corporates sacrifice sales growth to maintain their profitability 1. Pesaran, Hashem. (2004). General Diagnostic Tests for (Table B1). Cross Section Dependence in Panel. CESifo Working Papers. 69. 10.2139/ssrn.572504. Estimated coefficient of COVID dummy indicates 2. Pesaran, Hashem. (2007). A Simple Panel Unit Root that OPM experienced rise of 71 bps, at 5 per cent level Test in the Presence of Cross Section Dependence. of significance. The coefficient of ATR shows the perverse Journal of Applied Econometrics. 22. 10.1002/jae.951. sign, however, it remained statistically insignificant. 3. Susanna Mansikkamaki. (2023). Firm growth and From the expenditure side, as expected, the ratio of raw profitability: The role of age and size in shifts material cost to sales exhibited negative relationship with between growth–profitability configurations. Journal OPM. Further, estimated coefficients of macro variables of Business Venturing Insights (Elsevier) 19 e00372. have the expected signs. II.6. Debt serviceability – Stronger Balance Sheets: The decline in the ICR below unity was How Companies Improved Their Financial Health particularly pronounced within the non-IT services sector, underscoring increased financial strain Post-pandemic, companies improved their ability during coronavirus pandemic. This trend was to service debt, with the interest coverage ratio (ICR) predominantly driven by significant downturn in rising significantly. Manufacturing firms showed the ‘Telecommunication’ and ‘Transport and Storage strong financial resilience. The interest coverage ratio, Services’ industries. ICR of non-IT services companies which measures a company’s ability to pay interest on its debt, shows a notable improvement at aggregate improved since pandemic and crossed unity. Due level during the post-COVID period compared to pre- to substantial profit growth and effective cost COVID and during COVID times. During pre-COVID management in the manufacturing sector, the ICR, on period, the ICR of listed NGNF companies ranged from an average, improved to 7.7 post-COVID, signifying 3.2 to 4.8, indicating a stable ability to cover interest a notable enhancement in financial health and a expenses. During COVID, the ratio inched-up to 3.7 stronger capacity to service debt. The improvement in from 3.3 during the previous year, reflecting resilience debt serviceability was particularly attributed to the amidst economic challenges. strong performance of the ‘Chemicals and Chemical 182 RBI Bulletin October 2025Resilience and Revival: India’s Private Corporate Sector ARTICLE Chart 9: Interest Coverage Ratio Chart 10: Size-wise Sales Growth (Times) (Per cent) 9 80 40 8 70 35 30 7 60 25 6 50 20 5 40 15 4 10 30 3 5 20 2 0 1 10 -5 -10 0 0 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 -15 Manufacturing Services (non-IT) 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Aggregate IT (RHS) Large Medium Small All companies Sources: Capitaline database; and RBI staff estimates. Sources: Capitaline database; and RBI staff estimates. Products’, ‘Motor Vehicles and Other Transport 84 per cent across the periods). Across all size firms, Equipment’, and ‘Pharmaceuticals and Medicines’ corporates exhibited steady increase in sales growth industries. Although the debt serviceability of during the pre-pandemic years. The onset of the ‘Petroleum Products’ industry improved after the pandemic and various social distancing norm related pandemic, it remained below its pre-COVID levels. In measures implemented by the government impacted contrast, ICR of IT sector exhibited moderating trend the corporate performance severely across all firm over the period but it remained at very high level, sizes, as reflecting in contraction in sales and the nominal GVA growth during COVID period (Chart 10 given its lower dependence on debt (Chart 9). and Annex Table A3). II.7. Firm size-wise analysis: Big vs Small: Who Led Large companies emerged as the primary the Corporate Recovery? contributors to overall profitability, consistently Large corporations drove overall profitability, but achieving higher operating profit margins compared to medium and small firms also demonstrated greater medium and small size firms. Despite the pandemic- improvements in debt servicing. Cost efficiency induced decline in sales, firms managed to improve helped all firm sizes recover from pandemic losses. To their operating profit margins through effective differentiate the corporate performance based on size cost-cutting measures and operational efficiency of a company, listed companies were classified into enhancements during the crisis (Chart 11). three size groups according to their paid-up capital in Deleveraging of balance sheet by corporates and the respective year. Companies having paid-up capital improved profitability helped better debt serviceability more than Rs. 25 crores, between Rs 10 crore to Rs 25 across the size categories. When examining debt crore and less than Rs 10 crore were classified as large, serviceability across firm size, medium and small-sized medium and small companies, respectively. companies demonstrated higher debt serviceability Aggregate level sales growth was mainly driven compared to their larger counterparts. However, it was by large companies (having sales share of around 81- the large companies that significantly drove the debt RBI Bulletin October 2025 183ARTICLE Resilience and Revival: India’s Private Corporate Sector Chart 11: Size-wise Operating Profit Margin Chart 12: Size-wise Interest Coverage Ratio (Per cent) (Times) 20 8 7 18 6 16 5 14 4 3 12 2 10 1 8 0 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Large Medium Small All companies Large Medium Small All companies Sources: Capitaline database; and RBI staff estimates. Sources: Capitaline database; and RBI staff estimates. serviceability metrics of listed private non-financial Overall, the level of debt of listed private non- corporates (Chart 12). financial corporates increased from pre-COVID to the latest year. But, there has been higher increase III. Balance Sheet Analysis - Deleveraging for in borrowing by large companies than their counter Stability: The Shift Towards Financial Strength parts. On the other hand, the level of equity base Companies pursued deleveraging, reducing their increased at a faster pace than the debt levels across debt burdens while improving financial health. At the all firm size companies. Consequently, the leverage aggregate, the listed private non-financial companies ratio improved for all sized groups6, though the went through a gradual process of deleveraging, as deleveraging was more evident for the other than exhibited by their debt5 to equity and debt to asset larger sized companies (Chart 14). ratios, during the period under study, barring uptick Analysis of sources and uses of funds for listed seen during the pandemic year. private manufacturing companies indicated that Deleveraging trend was mostly observed in the retained earnings remained the major source of manufacturing and IT sector companies. In contrast, funds, contributing to more than 55 per cent share in the non-IT services sector witnessed higher leverage total equity and liabilities across all the years barring with consistent rise till 2022-23, which was mainly 2019-20. Capitalisation of higher net profit resulted in due to lower equity base primarily reflecting decrease higher accumulation of retained profit across most of in their retained earnings. Higher leverage of non- the periods (Chart 15). IT services companies was predominantly reflecting Build-up of total assets (i.e. annual absolute stress in the telecom and transport sector companies. change) of the manufacturing companies rose However, capitalisation of higher profit during 2023- gradually during post pandemic period. The 24 and 2024-25 helped the sector to arrest the rising 6 For Large-sized companies, the leverage ratio (debt to equity ratio) leverage trend (Chart 13). improved to 94.0 per cent in 2024-25 from 139.2 per cent in 2019-20 and for remaining companies, it improved to 66.1 per cent in 2024-25 from 5 Debt is defined as difference between total liabilities and equity. 115.2 per cent in 2019-20. 184 RBI Bulletin October 2025Resilience and Revival: India’s Private Corporate Sector ARTICLE Chart 13: Corporate Leverage a. Debt to Equity Ratio b. Debt to Asset Ratio (Per cent) (Per cent) 450 400 350 300 250 200 150 100 50 0 Manufacturing IT Non-IT Aggregate Manufacturing IT Non-IT Aggregate c. Median Debt to Equity Ratio (Per cent) Note: Shaded area refers to 25th and 75th percentile range. Sources: Capitaline database; and RBI staff estimates. manufacturing companies used more than 50 per fixed assets and non-current investments (financial) cent of the funds for the purpose of building-up the across the period under study, barring COVID and the RBI Bulletin October 2025 185 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 42-3202 52-4202 90 80 70 60 50 40 30 20 10 0 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 42-3202 52-4202 180 150 120 90 60 30 0 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Chart 14: Debt and Equity Levels Chart 15: Sources of Funds - Manufacturing Companies (₹ Thousand crores) 5000 (Share in per cent) 120 4500 % 100 4000 22.6 % 3500 1.5 80 8 3000 60 2500 40 2000 20 1500 0 1000 13.8% 98.3% 500 -20 0 -40 Large Others Large Others -60 Debt Equity 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Reserves and surplus Long term borrowings Trade payables Pre-COVID (2019-20) Latest (2024-25) Short term borrowings Other liabilities Sources: Capitaline database; and RBI staff estimates. Sources: Capitaline database; and RBI staff estimates.ARTICLE Resilience and Revival: India’s Private Corporate Sector Chart 16: Uses of Funds - Manufacturing Companies a. Change in Total Assets b. Uses of funds (₹ Thousand crore) (Share in per cent) 400 100 375 350 80 300 274 60 250 40 20 200 0 150 -20 100 -40 50 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Fixed assets Loans andadvances Investments 0 Inventories Tradereceivables Cash and cashequivalents 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Other assets Sources: Capitaline database; and RBI staff estimates. following year. While during COVID, major portion stable profit margins, while non-IT services, after of the funds were used for building up fixed assets, initial volatility, rebounded strongly. IT sector growth during 2021-22, funds were utilized for making non- remained steady throughout. current investments (Chart 16). Balance sheet analysis indicates that corporates IV. Conclusion continued to deleverage their balance sheet, which will help to undertake fresh investment activities. India’s private corporate sector has demonstrated Medium and small firms enhanced their debt servicing significant resilience and adaptability amid economic capacity, contributing to overall financial stability. disruptions led by the COVID-19 pandemic. While the weak domestic economic activity underpinned The study underscores the corporate sector’s by sluggish private consumption during 2019-20 and ability to navigate crises and emerge stronger, the pandemic overblown the situation further causing positioning itself as one of the important drivers a significant contraction in sales and profitability. of India’s economic growth. With a robust financial Corporate sector rebounded strongly thereafter, foundation and adaptive strategies, the sector remains supported by fiscal and monetary policies, pandemic- well-placed to capitalize on future opportunities and led pent up demand, and effective cost management. contribute to sustained economic expansion. Looking Sales growth peaked at 32.5 per cent in 2021-22 before ahead, sustaining corporate growth will largely depend normalising at 7.2 per cent in 2024-25, reflecting on a combination of factors such as macroeconomic a transition from a rapid recovery phase to stable conditions, domestic demand, supportive policy growth. Operating profit margins remained resilient, measures, and global market dynamics. Additionally, with large firms consistently outperforming medium strengthening supply chains, improving cost and small enterprises. Despite challenges, cost efficiencies, and fostering technological innovations optimisation strategies helped businesses sustain will play a key role in maintaining competitiveness profitability. The manufacturing sector maintained and shaping overall corporate performance. 186 RBI Bulletin October 2025Resilience and Revival: India’s Private Corporate Sector ARTICLE References: the Council for Social Development, Hyderabad on January 28, 2022. Retrieved from https://www.rbi.org. Bai, J., Choi, S. H., & Liao, Y. (2021). Feasible generalized in/Scripts/BS_SpeechesView.aspx?Id=1195. least squares for panel data with cross-sectional and serial correlations. Empirical Economics, 60, 309-326. Pramesti, N. P. E., Yasa, P. N. S., and Ningsih, N. L. A. P. (2021). The Effect of Capital Structure and Sales International Monetary Fund (IMF). World Growth on Company Profitability and Value in the Economic Outlook: countering the Cost-of-Living Cosmetics Manufacturing and Household Needs Crisis. 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Accounting & Organizational Change, Vol. 16 No. 4, William C. House, and Michael E. Benefield (1995). pp. 579-585. The impact of sales and income growth on profitability Patra, M. D. (2022), “RBI’s Pandemic Response: and market value measures in actual and simulated Stepping out of Oblivion”, Keynote Address delivered industries. Developments In Business Simulation & at the C D Deshmukh Memorial Lecture Organised by Experiential Exercises, Volume 22, 1995. RBI Bulletin October 2025 187ARTICLE Resilience and Revival: India’s Private Corporate Sector Annex Table A1: Performance of Listed Non-Government Non-Financial Companies (Growth in per cent) Year 188 RBI Bulletin October 2025 fo rebmuN seinapmoC selaS htworG erutidnepxE htworG waR fo tsoC lairetam htworG tsoC ffatS htworG dna rewoP htworG leuF gnitarepO tiforp htworG tiforp teN htworG AVG htworG 2016-17 3,007 3.1 3.8 4.8 8.7 -1.2 5.4 11.2 6.6 2017-18 3,096 9.8 10.1 12.3 7.5 17.5 5.2 -0.3 5.8 2018-19 3,151 14.0 15.3 16.9 10.6 15.7 10.5 36.2 11.7 2019-20 3,064 -4.2 -5.2 -10.2 8.1 -6.0 -3.9 -58.7 0.7 2020-21 3,049 -4.2 -7.1 -7.0 0.3 -21.6 10.4 115.6 6.2 2021-22 3,166 32.5 36.2 47.6 16.0 47.3 27.4 71.7 20.4 2022-23 3,115 19.8 22.0 20.6 16.6 48.8 2.7 -0.2 8.8 2023-24 3,281 4.7 2.8 0.1 9.2 -8.1 14.4 18.0 12.1 2024-25 3,902 7.2 7.3 6.7 7.7 -2.5 8.9 18.9 9.3 Table A2: Sector-wise Performance Parameters of Listed Non-Government Non-Financial Companies (Growth in per cent) Manufacturing Services (IT) Services (non-IT) Year fo rebmuN seinapmoC selaS htworG gnitarepO tiforP htworG tiforP teN htworG AVG htworG fo rebmuN seinapmoC selaS htworG gnitarepO tiforP htworG tiforP teN htworG AVG htworG fo rebmuN seinapmoC selaS htworG gnitarepO tiforP htworG tiforP teN htworG AVG htworG 2016-17 1,875 4.2 12.2 28.0 10.6 199 9.4 8.0 8.7 8.7 579 -1.5 -7.7 -114.5 -2.0 2017-18 1,891 11.9 10.4 2.0 9.7 192 5.0 3.2 10.1 6.0 626 1.8 -17.9 $ -8.5 2018-19 1,918 14.8 16.3 42.2 13.7 202 16.2 14.0 3.6 11.9 628 11.3 -12.8 $ -2.5 2019-20 1,841 -7.4 -11.6 -11.0 -7.0 195 8.4 8.7 10.0 10.5 616 6.9 47.9 $ 38.0 2020-21 1,830 -2.8 10.6 23.0 7.6 198 4.4 15.5 8.0 6.7 637 -14.6 3.1 $ -5.3 2021-22 1,865 36.7 34.5 50.2 24.3 216 19.8 11.0 21.1 18.3 699 27.2 21.9 $ 17.6 2022-23 1,821 18.0 -1.2 -3.8 3.9 215 19.4 8.8 -0.4 15.6 689 33.5 15.1 $ 18.0 2023-24 1,846 3.5 12.4 8.5 10.5 211 5.5 5.6 10.5 7.8 927 7.9 27.9 $ 21.8 2024-25 2,055 6.0 6.0 12.2 8.6 255 7.1 6.1 7.0 5.5 1,223 11.4 15.9 @ 17.3 Note: The ratio / growth rate for which denominator is negative or negligible, is not calculated and is indicated as ‘$’ and ‘@’ respectively. Table A3: Size-wise Performance Parameters of Listed Non-Government Non-Financial Companies (Growth in per cent) Large Medium Small Year htworG selaS erutidnepxE htworG gnitarepO htworG tiforP tiforP teN htworG htworG AVG htworG selaS erutidnepxE htworG gnitarepO htworG tiforP tiforP teN htworG htworG AVG htworG selaS erutidnepxE htworG gnitarepO htworG tiforP tiforP teN htworG htworG AVG 2016-17 3.2 4.0 5.4 11.2 6.7 4.4 4.5 9.8 19.7 8.3 -1.8 -0.8 -5.0 -3.8 0.6 2017-18 9.9 10.1 5.8 -1.8 5.4 9.0 10.2 1.2 10.1 9.4 9.6 10.4 2.6 4.7 5.8 2018-19 14.6 16.0 11.0 43.2 13.0 11.2 12.7 5.0 -2.2 3.1 11.4 12.3 12.5 18.4 10.2 2019-20 -4.1 -4.9 -3.8 -67.5 0.7 -3.7 -5.1 -1.7 2.0 2.5 -7.6 -8.8 -11.9 -17.8 -2.8 2020-21 -4.6 -7.4 8.7 146.8 5.9 -2.3 -5.7 24.0 38.3 8.4 -3.1 -6.1 17.8 29.8 6.0 2021-22 33.3 36.9 28.4 75.3 20.5 29.1 32.6 19.6 58.7 20.0 30.6 35.9 24.4 36.8 17.4 2022-23 20.7 23.4 1.9 -0.1 8.5 16.3 16.3 10.3 -2.5 11.7 13.3 13.0 4.1 6.6 7.9 2023-24 4.6 2.3 15.2 18.1 12.1 6.3 6.4 8.0 15.7 11.5 3.8 1.8 14.3 24.8 14.0 2024-25 6.6 6.7 8.8 21.0 9.2 10.6 10.2 10.3 7.3 11.1 9.5 11.0 5.6 -3.7 6.8Resilience and Revival: India’s Private Corporate Sector ARTICLE Table A4: Nominal Growth in Gross Value Added (per cent) Industry-group 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Manufacturing 10.6 9.7 13.7 -7.0 7.6 24.3 3.9 10.5 8.6 Cement and Cement Products 13.1 12.1 5.1 17.9 17.5 -1.8 -13.6 21.9 -2.7 Chemicals and Chemical Products 11.4 13.8 10.1 0.4 11.3 24.5 8.6 -3.7 8.7 Computer and Electronic Equipments -4.0 9.8 8.2 -3.2 0.9 71.0 26.2 26.5 37.1 Electrical Machinery and Apparatus 5.1 2.7 7.8 -7.1 3.7 9.3 21.5 21.1 25.2 Fabricated Metal Products 0.1 16.7 18.6 -24.7 -7.1 36.3 15.3 16.3 8.5 Food Products and Beverages 16.6 -19.4 28.9 11.8 14.0 11.7 12.0 8.9 6.8 Glass and Glass Products 7.3 5.6 8.0 1.8 -9.3 26.2 14.9 22.3 -0.6 Iron and Steel 40.0 20.2 28.4 -18.9 45.7 53.6 -30.3 16.9 -3.8 Jewellery and Related Articles 5.6 19.7 -6.0 9.6 -19.5 30.9 37.3 9.1 17.9 Leather 4.3 18.2 12.2 14.7 -19.9 23.0 -2.2 -0.3 4.3 Machinery and Machine Tools 6.5 6.5 12.1 -4.4 3.4 16.9 17.2 18.5 13.6 Medical Precision and Other Scientific Equipments 9.1 32.1 16.0 8.0 16.3 19.2 22.3 28.4 28.6 Motor Vehicles and Other Transport Equipments 8.0 15.1 12.1 -18.6 -6.4 11.8 34.3 31.0 12.6 Other Manufacturing 17.7 60.8 68.6 -61.2 5.7 38.3 7.8 5.8 5.9 Paper and Paper Products 30.1 13.8 30.2 -46.4 -29.9 39.1 57.4 -6.5 -21.9 Petroleum Products 11.0 15.0 13.4 -1.5 -24.8 33.3 16.2 11.8 -11.7 Pharmaceuticals and Medicines 1.7 6.7 11.8 10.0 13.2 -0.9 8.2 19.5 20.1 Plastic Products 3.0 6.1 12.5 -4.3 30.4 12.2 -9.0 9.5 11.2 Precious and Non-Ferrous Metals 24.4 9.3 -8.3 -17.6 51.7 42.3 4.8 -34.9 57.9 Rubber and Rubber Products -16.4 -3.5 9.0 -0.2 21.3 -8.6 10.1 38.0 -5.0 Textiles 5.2 -7.7 7.6 -10.2 -11.8 60.7 -14.3 2.2 8.6 Tobacco Products 6.3 6.1 12.5 5.5 -8.1 13.5 21.5 6.9 3.1 Wood Products 10.8 7.0 7.1 8.0 -1.9 39.6 17.3 2.3 1.8 Services (non-IT) -2.0 -8.5 -2.5 38.0 -5.3 17.6 18.0 21.8 17.3 Business Support Services 8.6 3.3 2.8 7.0 32.6 25.6 33.8 15.2 14.8 Hospital Services 8.6 10.3 22.1 31.7 -28.5 36.5 16.4 16.7 56.1 Hotel and Restaurant 2.9 2.8 0.5 1.4 -64.5 86.7 58.7 15.5 10.2 Other Services 4.1 5.9 4.3 7.1 -11.0 19.1 17.3 18.3 15.5 Real Estate -8.8 -7.0 -3.0 23.7 -23.7 41.6 21.7 -7.0 8.6 Telecommunication -5.7 -29.9 -19.0 76.9 27.0 8.9 4.0 19.6 19.9 Transport and Storage Services -2.8 -1.9 -15.0 64.1 -31.2 0.3 54.1 53.9 13.5 Video and Television Programming and Broadcasting 12.9 24.8 11.8 -4.1 -22.4 16.6 0.3 15.3 -6.2 Wholesale and Retail Trade -4.3 10.4 13.8 15.9 -15.5 46.2 37.9 16.0 15.1 Services (IT) Computer and Related Activities 8.7 6.0 11.9 10.5 6.7 18.3 15.6 7.8 5.5 RBI Bulletin October 2025 189ARTICLE Resilience and Revival: India’s Private Corporate Sector Table A5: Description of Variables used in the FGLS model Sales growth (y-o-y) It is the percentage change of a net sale over a given period of time. To compute the growth rates, a common set of companies for the current and previous period is considered. Asset turnover ratio ATR is defined as net sales to total asset ratio which measures how efficiently a company uses its assets to generate revenue. Since, total assets of a company are available on half-yearly basis, for compiling quarterly data on ATR, average total assets is compiled as indicated below: For Q1 and Q2 of current financial year, Total Assets Total Assets Average assets H,previous year H,current year 2 1 + = 2 For Q3 and Q4 of current financial year, Total Assets Total Assets Average assets H,current year H,current year 1 2 + Staff cost to sales ratio It is defined as ra=ti o of total staff expenses to net sales of the given quarter. 2 Cost of raw material to sales ratio It is the ratio of cost of raw material to the net sales of the given quarter. WPI (Manufacturing) inflation (y-o-y) WPI Manufacturing inflation is the y-o-y growth of quarterly average of monthly WPI (manufactured products) series published by OEA, DPIIT, MoCI. GVA (Manufacturing) growth (y-o-y) GVA manufacturing is the y-o-y growth in quarterly manufacturing GVA (nominal), published in NAS, MoSPI. COVID dummy COVID dummy takes value 1 during the periods Q4:2019-20 to Q4:2020-21 and 0 otherwise. Post COVID Dummy Post-COVID dummy takes value 1 for the periods Q1:2021-22 to Q4:2024-25 and 0 otherwise. Chart 1: Correlogram plot of independent variables in FGLS Model Asset turnover ratio GVA (Manufacturing) growth Sales growth WPI (Manufacturing) growth Staff cost to sales Note: The growth rates are calculated on y-o-y basis. Sources: Capitaline database; and RBI staff estimates. 190 RBI Bulletin October 2025 )gnirutcafunaM( IPW htworg htworg selaS )gnirutcafunaM( AVG htworg oitar revonrut tessA lairetam waR selas ot tsoc Corr 1.0 0.5 0.0 -0.5 -1.0Fundraising by Indian Small and Medium Enterprises through IPO: ARTICLE Recent Trends and Developments Fundraising by Indian Small capital market plays a crucial role, both in the form of fundraising through the initial public offering (IPO) in and Medium Enterprises the public market or through venture capital/private through IPO: Recent Trends equity/angel/incubation ecosystem in the private capital market. As India’s startup ecosystem grows, and Developments fundraising by technology-based companies in capital markets gains prominence2. by Bhagyashree Chattopadhyay and The SME IPO market in India witnessed a Shromona Ganguly^ strong surge during FY 2023-24 and FY 2024-25, driven by retail participation, and favourable market This study examines the performance and trends of sentiment. A surge in SME listings on dedicated SME IPOs in India during 2023-24 and 2024-25, with exchanges, coupled with strong oversubscription a focus on their evolution, market behaviour, and investor rates, highlighted investor enthusiasm for small and response. By analysing data from recent SME IPOs, the mid-sized enterprises’ IPO. study explores the factors influencing subscription rates, Set at this backdrop, this study examines the listing gains, and post-listing performance. This study performance and trends of SME IPOs in India during underscores the importance of due diligence, regulatory FY 2023-24 and FY 2024-25, focusing on their evolution, compliance, and data/fact/research driven investment market behaviour, and investor response. The study decision in optimising IPO outcomes for both SMEs and is organised in six sections. Section II outlines the investors. evolution and recent trends in fundraising by SMEs Introduction through IPO in the SME exchanges, followed by an attempt made in section III to identify the key macro- In a labour abundant country like India, economic and policy drivers that contributed to the small enterprises play a crucial role in economic bull run in this segment during last two years. Section development by creating jobs and facilitating export IV analyses sectoral composition, and key response as well as ensuring balanced regional development. indicators of the SME IPOs. Section V highlights some However, limited scale, lack of hard information on key features of recent SME IPOs, while Section VI business model and high monitoring cost hinder compares their post-IPO performance with mainboard their access to the formal credit and capital market IPOs. Finally, Section VII presents concluding (Saito and Villanueva, 1981). As per the World Bank observations. Enterprise Survey (WBES) reports, the per cent of small firms considering lack of finance as their II. SME IPO Market in India: Evolution and Recent biggest obstacle stood at 18.7 per cent and 21.8 per Trends cent globally and in India, respectively1. Access to India’s support for small-scale industries (SSIs) finance is even more challenging for technology- began post-independence, with the Gandhi-Nehru based firms due to business uncertainties and lack of model emphasising the role of handicrafts and cottage traditional collateral (Rajan & Zingales, 1998; Colombo industries. For decades, India adopted a protectionist & Grilli, 2007). For these innovative small businesses, approach to support the SSI sector, reserving product ^ The authors are with Department of Economic and Policy Research. 2 As per the latest data provided by the Department for Promotion of Views expressed in this article are those of the authors and do not Industry and Internal Trade (DPIIT), the IT startups recognised by the represent views of the Reserve Bank of India. DPIIT registered a compounded annual growth rate of 229 per cent during 1 Latest available data for India in this survey pertains to 2022. 2016-2024. RBI Bulletin October 2025 191ARTICLE Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments lines for SSIs (Mohan, 2002). However, since the mid- analytics, bio-technology and other startups without 1980s, economic liberalisation and global market a public listing. However, this framework failed to integration led to a shift from protectionist to gain traction due to several market-microstructure market-based policies, driven by growing concerns related issues (SEBI, 2018)4 and it remains a niche over the impact of protection on Indian SSIs. segment. In contrast, both BSE SME platform and NSE Several economists and policymakers attributed the Emerge witnessed rapid growth in terms of number of distorted size structure and “missing middle3” in companies and volume of funds raised over the years. Indian manufacturing to such protectionist measures Since its inception, both BSE and NSE SME (Mazumdar and Sarkar, 2009; Mohan, 2002; Krueger segment witnessed a broadly rising trend of activities 2013). Despite policy shifts, the sector continues to except a brief bout of downturn noticed during 2018- be high in priority in the broader industrial policy 2021 (Chart 1). As evident from Chart I, listings grew during the last decade, with special mention in the from 1 (₹7.25 crore) in FY 2011-12 to 80 (₹824.64 crore) Make in India, Startup India, Atal Innovation Mission, in FY 2016-17. FY 2017-18 saw a significant increase and AatmaNirbhar Bharat schemes. Industry 4.0 with 154 issues totalling ₹2,213.39 crore. There were advancements have created both opportunities and fluctuations in subsequent years, with lower activity challenges for Indian SMEs. The SAMARTH Udyog in FY 2019-20 and FY 2020-21 (total issue amount at Bharat 4.0 scheme, though operationalised under ₹435.64 crore and ₹244.29 crore, respectively) owing the aegis of the Ministry of Heavy Industries and to the pandemic. In sync with the post-pandemic Public Enterprises, mentions adoption of industry 4.0 economic recovery, there was a surge in SMEs entering technology by both the large and the small-scale sector capital markets. FY 2023-24 witnessed a sharp rise as its core vision. with 204 issues opening up and fundraising to the India’s effort to create a SME-focused exchange tune of ₹5,971.19 crore. dates back to 1989, when the Over the Counter Chart 1: SME IPO Issues across years in (OTCEI) exchange was set up specifically for the SMEs, BSE and NSE SME Platforms followed by the INDO NEXT Platform of Bombay Stock (Issue Amount (₹ crore) in Left Scale, No of Issues in Right Scale) 10,000 250 Exchange (BSE) in 2005. Since these initial efforts 9,000 achieved limited success, a more comprehensive 8,000 200 step came with the launch of the BSE SME platform 7,000 in March 2012 and National Stock Exchange (NSE) 6,000 150 Emerge in September 2012, which simplified listing 5,000 norms related to IPO size, post-issue paid-up capital, 4,000 100 3,000 and reporting requirements, as compared to the BSE 2,000 50 and NSE mainboards. In addition, Securities and 1,000 Exchange Board of India (SEBI) had also put in place - 0 the Institutional Trading Platform (ITP) framework in 2015 [later renamed as Innovators Growth Platform (IGP) in 2019] with a view to facilitating fundraising by Issue Amount (₹ crore) Number of Issues Source: Prime Database. new age companies in sectors like e-commerce, data 3 The term “missing middle” is used to describe the lack of transition 4 Some of these issues included difficulties in complying with SEBI's lock- of firms from micro/small to medium category, as a result of which the in period norms for promoters due to high investor churn during early size distribution of firms typically has very few in the mid-category. This stages of a start-up, as well as concerns over the abolition of special and adversely affects the productivity of the sector. differential voting rights among promoters post IPO. 192 RBI Bulletin October 2025 21-1102 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 42-3202 52-4202Fundraising by Indian Small and Medium Enterprises through IPO: ARTICLE Recent Trends and Developments FY 2024 -25 marked a new development in the IPO SME IPOs have been in the spotlight in recent market with NSE achieving record milestone of having times, with probe by the SEBI revealing certain market highest number of IPOs in Asia and highest amount of irregularities5. Comparing the SME IPO indices to equity capital raised in primary market globally (NSE broader market indices in the last two years (Chart press release, Jan 3, 2025). Total number of IPOs in 2), it is observed that the BSE SME IPO index6 NSE in CY 2024 stood at 268, as compared to 101 in China (Shanghai Stock Exchange), 66 in Hong Kong outperformed the mainboard IPO index and the BSE (Hong Kong Stock Exchange), and 93 in Japan (Japan Sensex registering significantly high returns. Exchange Group). The IPO market buoyancy was Following this ebullience, and increased interest partly attributed to democratisation of investment of retail investors on SME IPOs (Chart 3), SEBI has (NSE, 2024) whereby households increasingly warned retail investors to be careful and watchful channelise their savings to the capital market, strong fundamentals of the domestic economy as well as about the SME IPO space and urged investors to alluring market valuations. In sync with the buoyancy exercise caution while investing in the SME IPOs7. In in the broader market, SME fund raising through November 2024, SEBI in consultation with NSE, BSE, IPOs has gained a lot of traction in the last two years. and merchant bankers, reviewed the framework for The number of SME IPOs listed in BSE and NSE SME the SME segment and came up with a consultation platforms registed an increase of 87.2 per cent in 2024- paper relating to both facilitating and regulating IPOs 25 as compared to 2022-23. Furthermore, in 2024-25, the total SME IPO issue amount grew at 52.7 per cent by SMEs. On December 18th, 2024, the SEBI board over the previous year. approved some of these propositions (Annex E). Chart 2: Annual Returns of Indices Chart 3: Quarterly Median Number of Applications (Percetage Return) by Retail Investors per SME IPO 160 147.3 10,00,000 140 120 1,00,000 100 92.4 80 10,000 64.9 60 53.0 40.8 40 31.2 1,000 18.1 19.4 20 8.1 8.8 100 0 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 BSE SME BSE BSE Sensex NSE SME NIFTY 50 IPO Index Mainboard EMERGE IPO Index Index Source: Authors’ calculation based on data obtained from BSE and NSE. Source: Authors' calculation based on data obtaibned from Prime Database. 5 SEBI advisory for investors regarding investment in companies listed in SME segment (available at https://investor.sebi.gov.in/advisory-investment-in- sme-segment.html) and related SEBI orders. As per author’s calculations on the data from Prime Database, in FY 2023-24, 204 SME IPOs, which opened up issues initially aiming to cumulatively raise a sum of ₹5971 crore, ended up receiving bids for ₹5.6 lakh crore. 6 BSE SME IPO index is a strategy index on the Bombay Stock Exchange (BSE). It captures the performance of a select group of small and medium enterprises (SMEs) after they have been listed on the BSE SME platform. 7 SEBI Press Release Number 18/2024 dated August 18, 2024. RBI Bulletin October 2025 193 32-2202 : 1Q 32-2202 : 2Q 32-2202 : 3Q 32-2202 : 4Q 42-3202 : 1Q 42-3202 : 2Q 42-3202 : 3Q 42-3202 : 4Q 52-4202 : 1Q 52-4202 : 2Q 52-4202 : 3Q 52-4202 : 4QARTICLE Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments III. Major Drivers of the SME IPO Exuberance July 2025, their share had grown significantly to 38.9 per cent, reflecting a rapid rise in the participation of III.1 Strong market sentiment and confidence young investors in the stock market. The median age In FY 2023-24, India’s stock market demonstrated of investors in the stock market reduced to 33 years remarkable performance, driven by a combination in July 2025 from 38 years in March 2019 (NSE, 2025). of strong economic growth, enabling government Young investors typically have higher appetite for policies, and robust investor sentiment. This growth risk, which, coupled with advancement of technology was supported by India’s consistent GDP expansion, facilitating trading partly explains this trend. making it one of the fastest growing economies among G20 nations. Investor confidence was further bolstered III.3 Increased investors’ convenience through by government reforms aimed at enhancing growth advancement in payment and settlement mechanism of infrastructure and manufacturing, along with Unlike the traditional IPO process where the strong corporate earnings growth in FY 2023-24 (RBI application amount was debited immediately, Annual Report, 2023-24). The Indian stock market also the Application Supported by Blocked Amount partially benefitted from substantial foreign inflows (ASBA) system now allows the funds to remain in during FY 2023-24, with cumulative net FPI in equity the investor’s account, earning interest until the segment reaching ₹2.08 lakh crore8 , as compared to a allotment process is completed. This means that there net outflow in the previous year9. Additionally, India is no waiting for a refund in case of no allotment and attracted a broad base of investors, with a record 1.8 no upfront payment is needed from the investor. The crore new investors joining the market in FY 2023- introduction of the use of United Payment Interface 24, reflecting growing domestic participation10 . The (UPI) as an additional payment mechanism within market’s strength and investor confidence signalled a the ASBA framework in 2018 further facilitated retail bullish outlook despite global uncertainties. investors' participation in IPO market. Recently, SEBI III.2 Strong Demand by Retail Investors has nudged the Qualified Stock brokers (QSBs) in the secondary market (cash segment) to offer either The strong interest from retail investors in the of the UPI-block facility or a 3-in-1 trading facility to SME IPOs have been noteworthy, partly reflecting absence of lock-in period for retail investors, and investors11. easier availability of trading facilities nowadays. In III.4 State Government Incentives sync with the above trend, the median number of Some state governments like Tamil Nadu, and retail participants in SME IPOs rose significantly Gujarat have introduced schemes to incentivise fund during the period Q3: 2022-23 to Q3: 2024-25 raising through IPOs (Annex D). These incentives (Chart 3). Additionally, Indian stock market is now have aimed to reduce entry barriers for SMEs into dominated by young investors, aged below 30 years equity markets, promote formalisation and encourage (NSE, 2025). In March 2019, this age group accounted entrepreneurial growth. During the last two years, for only 22.6 per cent of the total investor base. By Maharashtra led the number of listings followed by 8 NSDL FPI monitor 9 However, in more recent months, FPI flows have been rather volatile, 11 Through this, investors would be able to block funds in their own with significant outflow from the equity segment in October and November bank account for trading in secondary market, instead of transferring 2024. Though FPIs returned to Indian stocks in December 2024 for a brief the same upfront to their broker or Trading Member (TM). In a 3-in-1 period, Q4, 2024-25 witnessed mostly outflow from the equity segment. account, brokers tie-up with a bank, so that client funds with the bank can 10 https://www.cogencis.com/blog/Markets_and_macro_in_the_year_ be blocked for trading in secondary markets. Investors continue to earn that_was interest on the blocked amount. 194 RBI Bulletin October 2025Fundraising by Indian Small and Medium Enterprises through IPO: ARTICLE Recent Trends and Developments a strong presence in the SME IPO segment, there Table 1 : Top States/UT in terms of Number of was also an increasing participation in digital driven SME IPOs sectors. FY 2023-24 FY 2024-25 Total Maharashtra 65 65 130 Sector-wise key response data indicates Gujarat 53 49 102 high oversubscription in utilities, clean energy, Delhi 30 35 65 travel services, automobile manufacturing, and West Bengal 8 20 28 environmental management indicating a preference Tamil Nadu 10 14 24 Rajasthan 5 12 17 for companies aligned with long-term infrastructure, Source: Prime Database; Prowess, Centre for Monitoring Indian Economy mobility, and sustainability themes (Annex B). A (CMIE) surge in SME listing in travel, logistics and education Gujarat and Delhi. Maharashtra and Gujarat dominate indicates post-pandemic pick up of growth in these the SME listings reflecting rapid infrastructure growth, sectors. industrial diversity, supportive policies, and ease of V. Salient Features of Recent SME IPOs doing business in these states (Table 1). V.1 Strong retail interest in SME IPOs IV. Sectoral Composition The number of applicants for SME IPOs has The manufacturing sector led SME IPO listings surged significantly from 4 per allottee in FY 2022- in terms of issue size due to its capital-intensive 23 to 245 applicants per allottee in FY 2024-25. One nature and scalability, followed by services (Table reason behind this surge is the active involvement 2). Within services, wholesale trade led by a of retail investors. During January-June 2023, 7 SME significant margin amidst policy boost supporting IPOs were oversubscribed over 100 times. From July India’s supply chain ecosystem. While the traditional 2023 onwards, this trend corroborated as 32 SME sectors like metals, infrastructure and chemicals had IPOs surpassed the 100x subscription mark, gaining Table 2: Sector-wise SME IPOs in FY 2023-24 and FY 2024-25 Sector Total No. of Issue size of NIC Division (Top 5, in terms of issue size) No. of SME Issue Size SME IPOs sector IPOs (₹ crore) (₹ cr) Agriculture 11 270 Crop and animal production and related activities 11 270 Manufacturing 209 7875 Civil engineering 23 974 Manufacturing of electrical equipment 14 898 Manufacture of basic metals 28 865 Manufacture of fabricated metal products 11 647 Manufacture of chemicals and 19 604 chemical products Services 220 6935 Wholesale trade, except of motor vehicles and motorcycles 85 2248 Computer programming, 23 799 consultancy, and related activities Telecommunications 11 761 Retail Trade 12 356 Human health activities 11 287 Source: Authors’ calculation based on data from Prime database and Prowess, CMIE. 12 Recently, SEBI has taken steps to align the allocation method for non-institutional (NII) category in SME IPOs with the mainboard IPOs, primarily to curb exuberance in the NII category. RBI Bulletin October 2025 195ARTICLE Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments Chart 4: Oversubscription to SME IPOs by Investor Type a. Quarterly Median of oversubscription in all investors category b. Quarterly Median of oversubscription in QIB investors category (Y-axis - Financial Year Quarter; X-axis - Oversubscription times) (Y-axis - Financial Year Quarter; X-axis - Oversubscription times) Q4:2024−25 Q4:2024−25 Q3:2024−25 Q3:2024−25 Q2:2024−25 Q2:2024−25 Q1:2024−25 Q1:2024−25 Q4:2023−24 Q4:2023−24 Q3:2023−24 Q3:2023−24 Q2:2023−24 Q2:2023−24 Q1:2023−24 Q1:2023−24 0 100 200 300 400 0 100 200 300 400 c. Quarterly Median of oversubscription in NII category d. Quarterly Median of oversubscription in retail investors category (Y-axis - Financial Year Quarter; X-axis - Oversubscription times) (Y-axis - Financial Year Quarter; X-axis - Oversubscription times) Q4:2024−25 Q4:2024−25 Q3:2024−25 Q3:2024−25 Q2:2024−25 Q2:2024−25 Q1:2024−25 Q1:2024−25 Q4:2023−24 Q4:2023−24 Q3:2023−24 Q3:2023−24 Q2:2023−24 Q2:2023−24 Q1:2023−24 Q1:2023−24 0 100 200 300 400 0 100 200 300 400 Source: Authors’ calculation based on data from Prime database. even more momentum since early November 2023. QIB oversubscription in the SME segment has Oversubscription was primarily driven by non- remained limited, with demand staying stable across institutional investors and retail investors12 (Chart 4). quarters (Chart 4b). Additionally, only a few foreign portfolio investors Oversubscription levels in Q4:2024-25 saw a have acted as anchor investors in SME IPOs. Notably, noticeable decline across investor segments, marking a few domestic firms have emerged as key players, a shift from the peak exuberance observed in previous serving as anchor investors in over 30 SME IPOs in quarters. This moderation aligns with regulatory 202413. actions introduced by SEBI in December 2024, aimed at curbing speculative excesses and bringing greater V.3 Reputation of merchant bankers as a key discipline to the SME IPO market. determinant of demand V.2 Relatively tepid response from Qualified Merchant banks are crucial intermediaries in Institutional Investors the SME IPO process, as they also play the role of mandatory market maker during the initial years Subscriptions from qualified institutional buyers after IPO. Reputed merchant banks are typically (QIBs) boost retail investors’ confidence in IPOs more trusted by investors due to their strong track while also bringing expertise that benefits companies record, global presence, and market expertise. To long-term. SEBI has introduced several initiatives to encourage QIBs to participate in SME IPOs. However, 13 Based on analysis of IPOs’ data from Prime database. 196 RBI Bulletin October 2025Fundraising by Indian Small and Medium Enterprises through IPO: ARTICLE Recent Trends and Developments Managers are on an average twice as those managed Chart 5: Retail Subscription (Times) by Merchant Bank Classification (Top and Non-Top) by others (non-top lead managers) (Chart 5). This [Average Subscription (times)] demonstrates the importance of the reputation of the merchant bank for attracting potential investors. Their extensive networks, strategic distribution, and 400 strong ties with institutional investors help generate demand even before the IPO launches, significantly increasing the likelihood of oversubscription. V.4 Listing Premiums 200 SME IPOs in India have been witnessing massive oversubscription, with listing at significant premiums. Some SME IPOs have surged by 100 per 0 cent post-listing, attracting retail investors primarily Q1: Q2: Q3: Q4: Q1: Q2: Q3: Q4: 2023-24 2023-24 2023-24 2023-24 2024-25 2024-25 2024-25 2024-25 seeking listing gains. During FY 2023-24 and FY 2024- Non Top Lead Managers Top Lead Managers 25 (till October 15, 2024), 224 out of 255 SME IPOs Source: Authors’ calculation based on data from Prime database. on NSE listed at a premium, while 31 debuted at a analyse the effect of merchant banks' reputation on discount. Similarly, on BSE, 91 out of 100 SME IPOs subscription rates, the lead merchant banks were saw listing gains, with only 9 listing below issue divided into two groups – top and non-top. The top price14. category included seven banks managing over 50 per cent of total IPO issue (value) in FY 2023-24 and FY SME IPOs’ listing premiums (measured as 2024-25, while the remaining banks were classified percentage gain of closing price on listing date over as non-top. Analysis shows that subscription rates the issue price) in India tend to range from 0 to 400 of IPOs managed by the top merchant banks/Lead per cent on the listing day (Chart 6), depending on Chart 6a. SME IPOs' listing gains in FY 2023-24 and FY 2024-25 Chart 6b. Mainboard IPOs' listing gains in FY 2023-24 and FY 2024-25 [Y-axis - Frequency; X-axis - Listing gains (Percentage)] [Y-axis - Frequency; X-axis - Listing gains (Percentage)] 60 60 40 40 20 20 0 0 0 100 200 300 400 0 50 100 150 200 Source: Authors’ calculation based on data from Prime database. 14 SEBI consultation paper on review of SME segment framework under SEBI (ICDR) Regulations, 2018, and applicability of corporate governance provisions under SEBI (LODR) Regulations, 2015 on SME companies to strengthen pre-listing and post-listing SME provisions. RBI Bulletin October 2025 197ARTICLE Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments indicate strong market sentiment, leading to Chart 7: Oversubscription Levels and Listing Gains substantial listing gains. for SME IPOs in FY 2023-24 and 2024-25 (Y-axis - Listing gains (Percentage); X-axis - Times Subscribed) V.5 Use of IPO proceeds by SMEs 400 An analysis of the type of capital15 in the SME IPO market in FY 2023-24 and FY 2024-25, reveals that in 300 both the years, the issue of fresh capital dominates, comprising over 90 per cent of the total issue (Table 200 3). This indicates that companies are raising funds for growth and operational needs rather than allowing 100 existing shareholders’ exit16. The proceeds from an IPO are typically 0 allocated to various strategic areas, reflecting the company’s short-term and long-term priorities. 0 200 400 600 800 Chart 8 depicts the primary reasons of fundraising Source: Prime Database. by SMEs in FY 2023-24 and FY 2024-25. It is observed factors like demand, merchant banker reputation, and that capital enhancement/working capitals has the the market sentiment. In contrast, mainboard IPOs, largest proportion, indicating the companies’ involving larger, established companies, undergo primary focus on improving liquidity or stricter regulatory scrutiny and attract a broader ensuring the availability of funds for operational investor base, including institutional investors, high requirements. The second-highest requirement is net worth individuals and mutual funds. As a result, for ‘expansion/new projects/plant & machinery’, their listing premiums tend to be more stable, typically suggesting a strong emphasis on growth and scaling averaging between 10 to 40 per cent. operations through new infrastructure or capacity Chart 7 highlights a positive correlation expansion. The allocation to general corporate between SME IPOs' subscription levels and listing purpose reflects miscellaneous expenses or flexibility day returns. This underscores the crucial role of in using funds for general business purposes. A retail and institutional demand in influencing IPO smaller yet significant portion of the IPO proceeds performance. Higher oversubscription levels often was used for reducing financial leverage, indicating Table 3: Type of Issue (Fresh Capital / Offer for Sale) in SME IPOs Total Issue Offer for Sale OFS as percentage of Total Fresh Capital Fresh Capital as percentage of Period Amount (₹ cr) (₹ cr) Issue Amount (₹ cr) Total Issue Amount FY 2023-24 5,971.19 310.26 5.19 5,660.93 94.80 FY 2024-25 9,119.97 775.6 8.5 8,344.37 91.5 Source: Authors’ calculation based on data from Prime database. 15 While fresh capital involves the issuance of new shares by the company to raise funds, offer for sale (OFS) involves the sale of existing shares held by the promoters, early investors, or other shareholders. The distinction between OFS and fresh capital in an IPO is crucial because it directly affects the company’s financial trajectory, investor sentiment, shareholding structure, and long-term business strategy. While fresh capital is viewed positively, as it indicates the company’s intent to grow and use the proceeds for productive purposes, OFS may raise concerns if promoters or early investors are offloading significant stakes. 16 Available promoter stakeholding data for a sample of 109 SMEs listed in CY 2024 showed that around 14 per cent of these firms witnessed individual promoter stake dilution at IPO to the tune of 22.6 per cent (on average) as compared to their stake pre-IPO (Data sourced from Prime Database). 198 RBI Bulletin October 2025Fundraising by Indian Small and Medium Enterprises through IPO: ARTICLE Recent Trends and Developments VI. Aftermarket Performance of SME Stocks Chart 8: Usage of IPO Proceeds by SMEs in FY 2023-24 and FY 2024-25 The return distribution of the companies which underwent IPOs in the last two financial years is R&D Retirement Of Debt Manpower 0.08% 5.93% 0.07% Acquisition/Strategic analysed in this section to track the post listing Investment Land/Real Estate 1.55% performance of the stock prices of the companies. 0.67% Chart 9 depicts the return characteristics of the SME Brand Building Issue Expenses & Advertising 9.18% 0.63% IPOs over 4-time horizons: 1 week, 1 month, 3 months Investment In Subsidiary/Joint and 6 months. Density plots showing the distribution Venture/Associate Capital Companies 2.57% Enhancement/ of returns across different horizons are observed Working Capital 43.01% General Corporate and compared against the distribution of returns Purpos 16.00% of companies listed on the mainboard in the same Furniture/Fixture/ Office Equipment period. The charts exhibit the differences in risk and 0.42% Expansion/New Project/Plant & return profiles and performance dynamics of IPOs in Machinery 19.53% the the two segments over different time periods. Source: Authors’ calculation based on data from Prime database. The return distributions of mainboard and SME the intent of these companies to diversify funding IPOs reveal notable differences across various time sources. horizons. Over one week, both mainboard and SME Chart 9: Post IPO Returns on SME and Mainboard Stocks for Different Time Periods a. 1 Week Return b. 1 Month Return (Y-axis - Density; X-axis - Return) (Y-axis - Density; X-axis - Return) 1.00 6 0.75 4 0.50 2 0.25 0 0.00 -0.2 -0.1 0.0 0.1 0.2 0.3 0 12 Mainboard SME Mainboard SME c. 3 Month Return d. 6 Month Return (Y-axis - Density; X-axis - Return) (Y-axis - Density; X-axis - Return) 4 2.0 3 1.5 2 1.0 1 0.5 0 0.0 0 1 2 3 4 0.0 2.5 5.0 Mainboard SME Mainboard SME Source: Authors’ calculation based on data from Prime database. RBI Bulletin October 2025 199ARTICLE Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments IPOs show returns centred near zero, but SME IPOs A notable trend in recent SME IPOs is the sharp exhibit a flatter and wider distribution, indicating listing gains, followed by negative returns within a higher variance. At the one-month horizon, both short period. This decline is even more pronounced groups display positively skewed distributions, with in IPOs that drew strong interest from retail investors many companies experiencing negative returns (Chart 10). The inability of many SMEs to sustain while a few achieve very high positive returns, and positive returns post-listing coupled with sharp listing differences between the two groups become less gains following increased interest from retail investors pronounced. At the three-month horizon, mainboard in these stocks prompted SEBI to initiate regulatory IPOs show a narrow distribution with returns measures aimed at restoring stability in the SME IPO concentrated near zero, reflecting lower variability segment (Annex E). and more predictable outcomes. In contrast, SME High demand for certain stocks, combined with IPOs demonstrate a much wider spread, including limited allotment, often leads to inflated prices as some extreme high-return outliers, suggesting greater investors compete to acquire shares. Retail investors, variability and the potential for both higher risks drawn by the potential for quick listing gains, often and rewards. By six months, the divergence becomes overlook fundamentals, leading to inflated valuations. even more evident, with mainboard IPOs maintaining A comparison of the price-to-earnings ratios of 100 a tight distribution around small positive returns, SMEs listed in FY 2023-24 and FY 2024-25 to their while SME IPOs show a long tail driven by a few very respective industry averages reveals signs of over- high-return outliers. However, zero/negative return is valuation in some of these stocks. Around 20 per observed in a large number of SME stocks. Overall, cent of these stocks have price-to-earnings ratios in mainboard IPOs consistently exhibit narrower and excessive multiples when compared to their industry more stable return distributions, while SME IPOs peers. present higher variability, with greater potential for both significant gains and losses, particularly over Table 4 shows possible overvaluation in a few longer time horizons. stocks which were oversubscribed heavily by retail Chart 10: Trend in SME Stocks' Return [Median return (per cent)] 190 140 90 40 -10 -60 Note: Based on analysis of 370 SME IPO listing during 2023-24 and 2024-25 Source: Authors’ calculation based on data from Prime database. 200 RBI Bulletin October 2025 ssol/niag gnitsiL keew 1 htnom 1 shtnom 3 shtnom 6 Bottom 10 SME stocks in terms of oversubscription (retail category) Top 10 SME stocks in terms of oversubscription (retail category) Stocks with promoter stake dilution at IPOFundraising by Indian Small and Medium Enterprises through IPO: ARTICLE Recent Trends and Developments Table 4: P/E ratios of Select SME IPOs in FY 2023-24 and FY 2024-25: One Week after Listing Stock Ratio of Oversubscription (Retail) to P/E Ratio Median P/E Ratio of Median Oversubscription* Peer Group Companies 1 14.28 104.92 35.44 2 14.28 32.66 34.34 3 11.58 111.94 53.52 4 11.24 62.32 41.75 5 9.65 77.95 43.78 6 8.52 57.47 44.74 7 7.41 25.51 34.15 8 7.27 38.72 40.34 9 7.15 36.49 51.49 10 6.19 45.56 39.37 Note: *: Oversubscription numbers are relative to average oversubscription for SME IPOs during the period under consideration. A higher P/E ratio compared with the industry average indicates possible overvaluation of the stock. Selected companies are from top 100 in terms of oversubscription (retail). Peer group companies are selected from listed companies pertaining to the same industry and similar size categories. For determining size category, the decile-wise classification of the Prowess database is used. Sources: Prime Database, and Prowess, CMIE. investors during listing. Following such exuberance, regulatory perspective, where there is a need to some stocks had substantially higher price to earnings balance the objective of market development with (P/E) ratios compared to their industry medians (Table that of investors’ protection. 4 and Annex C). Given the strong growth of start-ups in India, VII. Conclusion most of which have innovative business models, the provision of risk capital for these firms becomes The saying, “Bull markets are born on pessimism, crucial. Keeping in view the spurt of SME IPOs in grow on scepticism, mature on optimism, and die on recent months and the associated challenges from euphoria”, serves as a crucial reminder for investors the perspective of investor protection, SEBI in in the SME IPO segment. While the buzz around SME consultation with NSE, BSE and merchant bankers, IPOs may seem exciting, investing solely on market had initiated the review of the IPO framework for sentiment can be risky. During bullish phases in the SME segment. These measures aim to reduce the market, enthusiasm and investors’ appetite may information asymmetry and regulatory arbitrage, cause investors overlook due diligence. In this phase, ensure proper utilisation of IPO proceeds, prevent demand for IPOs surge, and expectations of substantial market manipulation, and protect retail investors. listing gains can lead to inflated valuations. However, The reforms are expected to foster transparency and market reversals can quickly dampen this optimism. stability in the SME IPO segment going forward. SME IPOs may offer impressive gains in References favourable conditions but carry higher volatility Bhattacharya, A. (2017). Innovations in new venture and risk during downturns, making due diligence financing: Evidence from Indian SME IPOs. Global indispensable. Investors should carefully evaluate Finance Journal, 34, 72-88. the company’s fundamentals, growth prospects, and risk factors before committing capital. Overall, Colombo, M. G., & Grilli, L. (2007). Funding gaps? SME exchanges offer a unique challenge from the Access to bank loans by high-tech start-ups. Small RBI Bulletin October 2025 201ARTICLE Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments Business Economics, 29, 25-46. and growth. American economic review, 88(3), 559- 586. Krueger, A. O. (2013). The Missing Middle. Economic reform in India: Challenges, prospects, and lessons, Securities and Exchange Board of India (SEBI). 299. (2024). Consultation paper on review of SME Mazumdar, D., & Sarkar, S. (2009). The employment segment framework under SEBI (ICDR) Regulations, problem in India and the phenomenon of the missing 2018, and applicability of corporate governance middle. Indian Journal of Labour Economics, 52(1), provisions under SEBI (LODR) Regulations, 2015 on 43-55. SME companies to strengthen pre-listing and post- Mohan, R. (2002). Small-scale industry policy in India. listing SME provisions. Economic policy reforms and the Indian economy, Saito, K. A., & Villanueva, D. P. (1981). Transaction 213. costs of credit to the small-scale sector in the NSE Press Release Mumbai, 03 January 2025. National Philippines. Economic Development and Cultural Stock Exchange achieves record milestones of highest Change, 29(3), 631-640. numbers of IPOs within ASIA & highest equity capital raised in primary market globally in calendar year SEBI (2018). Consultation Paper-Review of framework 2024 for Institutional Trading Platform. NSE (2024). Indian Capital Markets: Transformative Securities and Exchange Board of India (Issue of shifts achieved through technology and reforms Capital and Disclosure Requirements) Regulations, NSE (2025). Market Pulse Report. Volume 7. Issue 9. 2018. September 2025 World Bank.(2024). “World Bank Enterprise Surveys: Rajan, R., & Zingales, L. (1998). Financial development ‘Biggest Obstacle’ Indicator. 202 RBI Bulletin October 2025Fundraising by Indian Small and Medium Enterprises through IPO: ARTICLE Recent Trends and Developments Annex A: Top IPOs in India (in terms of Size) in FY 2024-25 Mainboard SME Name IPO Size (₹ crore) Name IPO Size (₹ crore) Hyundai Motor India Pvt. Ltd. 27,858.75 Danish Power Ltd. 188 Swiggy Ltd. 11,327.43 Sahasra Electronic Solutions Ltd. 176.83 NTPC Green Energy Ltd. 10,000 Capital Numbers Infotech Ltd. 160.69 Hexaware Technologies Ltd. 8750 Rajesh Power Services Ltd. 152.29 Vishal Mega Mart Ltd 8000 Ganesh Green Bharat Ltd. 118.94 Source: Prime Database. Annex B: Oversubscription in SME IPOs: Sector-wise in FY 2023-24 and FY 2024-25 Sector Total No of Median NIC Division (Top 5 in terms of times subscibed) No of Median over- Companies in Subscription Companies subscription sector times Agriculture 11 68 Crop and animal production 11 68 Manufacturing 209 82 Electricity, gas, steam, and air conditioning supply 1 770 Manufacture of motor vehicles, 5 239 trailers, and semi-trailers Manufacture of beverages 1 216 Manufacture of other non-metallic mineral products 3 156 Manufacture of fabricated metal products 11 145 Services 220 69 Travel agency, tour operator, reservation service, 3 387 and related activities Environmetal and Waste Management 2 219 Education 3 210 Activities auxiliary to financial services and 4 196 insurance activities Telecommunications 11 161 Source: Authors' calculation based on data from Prime database and Prowess, CMIE. RBI Bulletin October 2025 203ARTICLE Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments Annex C: Valuation of Listed SMEs in Comparison with Peer Group Chart C1. PE Ratios-1week after Listing 150 100 50 0 Listed SME PE ratio PE ratio-Peer Group Companies Chart C2. PE Ratios-30 Days after Listing 140 120 100 80 60 40 20 0 Listed SME PE ratio PE ratio-Peer Group Companies Chart C3. PE Ratios-90 Days after Listing 150 100 50 0 Listed SME PE ratio PE ratio-Peer Group Companies Note: Based on 43 SME IPO listing data during 2023 and 2024. Selection of the sample is based on data availability within the top 50 SME IPOs in terms of oversubscription. Selection of peer group companies was subject to availability of data from Prowess database. Source: Prime Database and Prowess, CMIE 204 RBI Bulletin October 2025Fundraising by Indian Small and Medium Enterprises through IPO: ARTICLE Recent Trends and Developments Annex D: State Government Initiatives to boost SME Fund Raising • Government of Maharashtra and BSE have of Gujarat in 2020 whereby 25 per cent of signed a Memorandum of Understanding (MoU) eligible expenditure incurred on raising of fund in 2024 to help state MSMEs list on the BSE SME through SME Exchange is reimbursed by the board. BSE and the Maharashtra government, State Government. under the MoU, were to carry out collaborative • Rajasthan, in its MSME policy 2024, mentioned programs and activities to sensitise the investor that the state government has signed a MoU network about the advantages of listing for with the NSE to facilitate public listing of the SMEs and startups. Under the MoU, BSE would state’s SMEs in NSE Emerge. In addition, the help potential businesses in connecting with state shall provide one-time support to SMEs intermediaries like merchant bankers, registrar, up to a maximum of ₹15 lakh towards expenses transfer agent, depositories and others apart incurred for raising of funds through NSE’s/ from guiding MSMEs on capital markets, capital BSE’s SME exchange, subject to terms and raising mechanism, regulatory compliance and conditions. requirements. A similar MoU was signed with • The Uttar Pradesh government has signed a NSE as well. MoU with the NSE to facilitate capital raising • Subsidy for Fund Raising from SME Exchange was for the state’s SMEs. This is in addition to the introduced by the Tamil Nadu State Government state’s existing policy of reimbursement of 20 with the objective to facilitate high growth percent (maximum ₹5 lakh) of the expenditure potential SMEs in the state to raise equity capital incurred on raising equity funds through the through SME Exchange, in both the manufacturing stock exchange (Uttar Pradesh MSME Policy and services sector. The government would 2022). provide assistance for listing and raising money • The Government of Kerala has the scheme to in the SME stock exchange. Various expenses provide reimbursement of 50 per cent expenses like merchant banker fees, due diligence fees, subject to a maximum of ₹1 crore incurred on registrar and transfer agent fees, peer review floating IPOs through the SME platform of NSE or auditor fees, exchange fees, and listing charges BSE, provided the funds thus raised are utilised would be eligible for reimbursement. for setting up/expanding enterprise in the state, • Assistance for raising capital through SME in any of the priority sectors as outlined in the Exchange scheme was launched by Government Kerala Industrial Policy 2023. RBI Bulletin October 2025 205ARTICLE Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments Annex E: Key Reforms Proposed by SEBI for Orderly Evolution of the SME IPO Market Reducing information asymmetry and scope for e) SME to disclose details about senior management regulatory arbitrage: Keeping in mind the difficulty faced along with their experiences, number of by the investors, especially the retail investors, in obtaining employees registered in Employees' Provident correct and timely information about the IPO bound SMEs, Fund (EPF) portal, delay in payment of due in last SEBI has proposed the following regulatory changes: three years17. a) IPO-bound SMEs were not mandated to make f) Keeping in mind the importance of investor their offer documents public, unlike their protection, SEBI has proposed that post-listing mainboard counterparts. SEBI has proposed that exit opportunity will be extended to dissenting the Draft Red Herring Prospectus (DRHP) of the shareholders of the SME IPOs, in case of change SME IPO filed with the stock exchanges must be in objects or variation in the terms of contract made available to public for a period of at least 21 related to objects referred to in the offer days from the date of IPO (in one English, Hindi document. Earlier, this option was available only and regional newspaper, apart from posting in for investors in mainboard IPOs. websites of stock exchanges/lead managers for Tightening the grip on usage of IPO proceeds: In recent the issue). times, probe by SEBI has found misuse of IPO proceeds by b) In terms of Regulation 27 of the Listing few SMEs. To increase the vigil in this respect, SEBI has Obligations and Disclosure Requirements proposed the following changes: (LODR) Regulations, a listed entity on mainboard a) SME IPO proceeds cannot be used for the purpose is required to submit a quarterly compliance of loan repayment of promoter, promoter group report. The said report mandates disclosure of or any other related party. composition of directors, attendance details of directors, number of meetings held etc. No such b) In cases where the SME mentions the object requirement was applicable to SME listed entities. of IPO as working capital, statutory auditor’s SEBI has proposed that such disclosure now be certificate on a half-yearly basis certifying use of made mandatory for SME IPOs. funds would be required, if issue size exceeds ₹5 crore. c) Shareholding pattern, Statement of deviation(s) or variation(s) and financial results are required c) If the project for which IPO proceeds to be used is to be submitted half-yearly by SME listed entities co-financed by any bank/FI, then details regarding and quarterly by mainboard listed entities. SEBI sanction letter of the bank/FI to be disclosed in has proposed to make quarterly submission of draft/final offer document. these information mandatory for SME listed d) SEBI has also proposed major changes in the companies. related party transaction (RPT) regulations. d) Like mainboard IPOs, it will be mandatory for It may be noted that the SME IPOs were the merchant banker managing the SME IPO to governed by RPT regulations as per the submit the due diligence report to the exchange Companies Act, 2013, whereas the mainboard at the time of filing the draft offer document. IPOs need to comply the RPT regulations as This will include site visit report by the merchant per LODR Regulations, SEBI, which is stricter. banker. SEBI has proposed to extend RPT norms as per 17 As per SEBI observations, many SMEs do not disclose such details about their top management (SEBI, 2024). 206 RBI Bulletin October 2025Fundraising by Indian Small and Medium Enterprises through IPO: ARTICLE Recent Trends and Developments LODR to SMEs, subject to certain terms and Protecting investors’ interest: As analysed in earlier conditions. section of this note, retail investors’ participation in the SME IPOs have increased rapidly over the years. It e) Earlier, SMEs could utilise 25 per cent of their is in this context that protecting investors’ interest has total IPO proceeds for “general corporate purpose gained utmost prominence when it comes to investing (GCP)18”. In order to increase scrutiny on usage of in SME stocks. Keeping in view the above issue, SEBI has funds, this ceiling is now proposed to be reduced proposed to increase the minimum application size in the to 10 per cent, with an absolute limit of 10 crores. case of SME IPOs from ₹1 lakh to ₹ 2 lakh19, so that only This will prevent the tendency of misutilisation informed and skilled investors enter the SME IPO segment. of IPO proceeds by SMEs. Also, requirement of minimum allottees in SME IPOs is Curbing the possibility for market manipulation: In order proposed to be increased from 50 to 200, to ensure that to prevent market manipulation and ensure that promoters SMEs which have investors’ interest are only listed. This of the SMEs have enough skin in the game, SEBI has will also enhance aftermarket liquidity in SME exchanges, proposed to increase lock-in period for promoters of SMEs which is generally found to be lower (Bhattacharya, 2017). along with tweaking the existing criteria for determining Following the release of the consultation paper and the the minimum promoters’ contribution (MPC). There was a consideration of public comments on the above proposals, lock-in period of three years for the MPC and one year for in its 208th board meeting on Dec 18, 2024, SEBI approved anything in excess of the MPC. However, in few cases, SEBI several of these proposals to enhance transparency, has observed that promoters’ stake comes down drastically governance, and investors’ protection in SME IPO segment20. after the SME IPO. To prevent the possibility for market manipulation, SEBI has proposed to increase the lock- Key approved reforms – in period for MPC for SME IPOs from three to five years. • Profitability Requirements – SMEs are now required Additionally, excess shareholding by promoters over and to have a minimum operational profit (EBITDA) of ₹ 1 above MPC can be diluted only in a phased manner. crore in at least two of the preceding three financial Furthermore, to eliminate the possibility whereby years to be eligible for an IPO. promoters of SMEs purchase stock of the company at • Offer for sale (OFS) Limitations – The portion of cheaper price pre-IPO and sell the stocks at IPO at a higher shares offered by existing shareholders in an IPO is price to the public, SEBI has proposed to change the capped at 20 per cent of the total issue size. definition regarding eligibility of securities for MPC. SEBI • Usage of Issue Proceeds – SMEs cannot use IPO has proposed that price per share for determining securities proceeds to repay loans to promoters, promoter groups ineligible for MPC shall be adjusted for corporate actions, or related parties. like split/bonus. Usage of IPO proceeds for general corporate purposes Another important proposal in this regard is restricting is capped at 15 per cent of IPO size or ₹ 10 crore, the offer for sale (OFS) as percentage of issue size in the whichever is lower. SME IPOs. This follows the trend that in many SME IPOs, promoters dilute their stake instead of raising fresh capital • Allocation Methodology for NIIs – Allocation for expansion purpose. methodology for NIIs in SME IPOs is to be aligned 18 In terms of Issue of Capital and Disclosure Requirements (ICDR) Regulation 2(r), general corporate purposes is defined as: “general corporate purposes” include such identified purposes for which no specific amount is allocated or any amount so specified towards general corporate purpose or any such purpose by whatever name called, in the draft offer document, draft letter of offer, the offer document, or the letter of offer. 19 An alternate proposal in this regard is to increase the application size to ₹ 4 lakh, based on the growth of major stock market indices in last 14 years (since the inception of separate SME exchanges). 20 https://www.sebi.gov.in/media-and-notifications/press-releases/dec-2024/sebi-board-meeting_90042.html RBI Bulletin October 2025 207ARTICLE Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments with mainboard IPO procedure, whereby proportional 50 per cent of promoters’ holding more than the MPC allotment will be replaced by “draw of lots” method. shall be released after 1 year and the remaining 50 per cent promoters’ holding can be released after 2 years. • Pre-Listing Disclosures – The DRHP filed with exchanges is to be made available for 21 days for public • Related party transaction (RPT) norms, as applicable to provide comments, by making public announcement to listed entities on main board, to be extended to in newspaper. SME listed entities, provided that the threshold for • Lock-in on promoters’ holding – Lock-in on promoters’ considering RPTs as material shall be 10 per cent of holding held more than the minimum promoter annual consolidated turnover or ₹ 50 crore, whichever contribution (MPC) is to be released in phased manner. is lower. 208 RBI Bulletin October 2025Compliance to Confidence: A Data Quality Model for Central Banks ARTICLE Compliance to Confidence: and financial sector data from the regulated entities (REs). In a complex and dynamic data ecosystem, A Data Quality Model for measuring data quality also challenging. Automation Central Banks has an important role in ensuring the quality of data being collected, processed, and maintained at the by Debasis Nandi and Sujeesh Kumar^ data repository of the central bank. It will enable to effectively monitor various economic indicators, In a complex data ecosystem, ensuring the quality of obtaining regulatory and supervisory insights and data becomes challenging for central bankers, particularly facilitating data driven policies for the well-being of in a regulatory landscape. As measuring data quality the public. is contextual and subjective, it is emphasized that the Over the years, the data collection and need for tailored measurement strategies to develop dissemination process has undergone several various data quality dimensions to measure the quality transformational changes due to the rapid of data effectively. This article provides an approach for technological advancements witnessed across the constructing a data quality index (DQI) to evaluate the globe. Organizations, particularly central banks have quality of the data submitted by the regulated entities. adopted advanced statistical techniques and technology The article outlines a stepwise approach for constructing tools to validate the data generation process and best the data quality index at various levels. The proposed efforts have been made to address emerging data gaps DQI framework enables central banks and regulators and challenges. While addressing the challenges, an to monitor and improve data quality systematically evolving multitude of non-traditional data is adding enhancing institutional credibility, regulatory and more complexity in the data ecosystem. Girard (2020) supervisory efficiency, and public trust. noted that one of the of organizational challenges for managing data in the (AI) era is equipping staff to the Introduction latest tools and technologies. Central Banks play an important role, inter alia, in Measuring data quality is subjective in nature as maintaining financial stability and ensuring the health the measurement involves various techniques and of the banking sector. Daily operations of the banking depends on the type of data produced. A well-defined system produce large amount of data. Such data is an structure of data quality framework with suitable important asset for institutions like central banks, dimensions is an appropriate way to measure the multilateral bodies, and many other organizations quality of data (Van G.B. 2023). Motivated by this fact, a particularly entrusted with data collection and its structural approach for measuring various dimensions maintenance to support data driven policymaking. of data quality and deriving data quality indices for The ultimate objective of data management is the the data generation and collection process have been production and dissemination of quality data–a attempted. With this backdrop, this article has the precious asset in the present world. primary objective of providing an approach to measure A key part of the functioning of the central banks the data quality considering various data quality involves the collection of huge volume of banking dimensions defined in the literature. The existing data quality frameworks by various organisations ^ The authors are from the Department of Statistics and Information Management, Reserve Bank of India. The views expressed in this article does not provide specific formula for calculating are those of the authors and do not represent the views of the Reserve Bank of India. various measures of data quality dimensions, while it RBI Bulletin October 2025 209ARTICLE Compliance to Confidence: A Data Quality Model for Central Banks specifies broad guidelines for assessing various quality it was argued by Strong et al. (1997), that fitness dimensions. Besides, frameworks do not suggest a for usage varies for different users under different data quality index (DQI) measure for data collection circumstances and therefore data quality is relative process and dissemination process separately. and cannot be evaluated independent of users. Federal Committee on Statistical Methodology (FCSM) In the Indian context, the Reserve Bank of India defined data quality as the degree to which data (RBI) has recently published supervisory data quality capture the desired information using appropriate index (sDQI) scores for the supervised entities methodology in a manner that sustains public trust. based on four data quality dimensions viz., accuracy, The importance of data quality was highlighted by completeness, timeliness and consistency. The sDQI several authors. Poor quality of data leads to wrong provides a measure of the supervisory data quality, conclusions and substandard decision making forming the basis for supervisory examinations leading to financial losses. It can result flawed risk (RBI,2025). The sDQI is intended to measure the data assessments and negatively affects the organizational quality of select supervisory returns in a supervisory performance, demanding data governance strategies data collection perspective. (Redman, 2008; Kharti & Browm, 2010; Lee et al., 2004) In the central banking context, data provided by Researchers have pointed out several challenges the regulated entities not merely for the supervisory in measuring data quality. As the data changes over purpose, while it is being used for regulatory, policy time, data categorized as ‘high-quality’ today may formulation, statistical data dissemination, research not remain the same in the future. This dynamic and various other purposes. The approach outlines nature of data requires continuous monitoring in this article is not limited to supervisory data; it and frequent reassessments (Batini et al., 2009). encompasses all types of data collected from regulatory Measuring data quality becomes complex and tedious entities through prescribed returns. Furthermore, the when it comes to large volumes of data, particularly DQI presented in this article extends beyond the four in a big data environment. It will be more difficult data quality dimensions, covering data collection and to track all dimensions of data quality (Muller et al., dissemination aspects. This article thus helps bridge 2012). In a dynamic data environment, the selection existing gaps in this aspect. of dimensions may be contextual and relevant. A The rest of the paper is structured into five framework developed by Fadahunsi et al. (2009) sections. The next section presents a brief review of addressed these challenges to a certain extent. the literature. In Section III a description of various For instance, the information quality framework data quality dimensions is given, while Section IV categorizes dimensions into intrinsic, contextual, outlines the method to construct a data quality index representational, and accessibility aspects providing a using several dimensions discussed in section III. comprehensive approach for evaluating data quality. Furthermore, data consistency becomes a sizable issue Finally, section V concludes the article. when the number of data source increases, regardless 2. Review of Literature ‘fitness of use’ for any particular purpose. Therefore, Data quality has been defined differently across a standardized approach is appropriate when there the literature. Data quality is the extent to which the is a disagreement regarding data quality between data satisfies the users’ needs (Wang, 1998). One of different domains of people. Brining quality process the widely accepted definitions of data quality by under a data governance structure would be a solution Wang and Strong (1996) is ‘fitness for use’. While for ensuring data quality (Smallwood, 2014). 210 RBI Bulletin October 2025Compliance to Confidence: A Data Quality Model for Central Banks ARTICLE Subjectivity in the selection of various quality A third approach would be a hybrid approach, matrices is also another challenge in measuring which is the combination of both quantitative and data quality. These subjective measures can vary qualitative methods. This approach recognizes that no between users, leading to inconsistencies in quality single method can fully address all the complexities assessments (Redman, 2008). High-quality data is of data quality measurement, particularly in a a fundamental requirement for any information heterogeneous and dynamic data environment. system, while inaccurate data costs organizations Hybrid models are adaptable and flexible, and they deeply in correction activities, lost customers, missed can easily integrate real-time data quality monitoring opportunities, and incorrect decisions. Issues like with ongoing feedback from users. wrong data entry can reduce the accuracy of the data. Several data quality frameworks have been This can also lead to wrong information when data proposed by organizations like the IMF, World Bank is inappropriately reported or used (Olson,2003). and many other multinational institutions. Such Garreitt et.al., (2014) investigated the association frameworks often integrate multiple dimensions and between organizational trust in the management provide a structured approach to evaluate data quality and financial reporting aspects like accruals quality, mis statements, and internal control quality. They across several aspects. A notable framework introduced found that trust is significantly associated with by the IMF is known as Data Quality Assessment financial reporting quality and varies relatively in Framework (DQAF), which provides a comprehensive decentralized firms, while not those in a centralized model for evaluating data quality. It incorporates data environment. dimensions such as accuracy, reliability and timeliness, and is specifically designed for assessing statistical data Measuring data quality is an important step in government and international organizations (IMF, in the data quality management process. Various 2003). Another seminal framework proposed by Wang approaches for measuring data quality dimensions and Strong (1996) is known as Information Quality have been discussed in the literature, while the Framework (IQF), which mainly emphasizes that data quality dimensions considered appear to be common quality is a multi-dimensional concept that includes across the literature. These approaches are mainly quantitative, where the quality of data is measured both technical aspects like accuracy and consistency based on statistical techniques or simple arithmetical and user perceptions of data quality. Calculating a ratio or using some modeling approach that consider data quality index (DQI), based on suitable quality various quantifiable ratios and measures (Rahm & dimensions is a typical approach, which has been Do, 2000 and Chandola et al., 2009). However, certain used in various fields such as healthcare, industries quality dimensions are not directly measurable from and finance, facilitating a single composite measure the systems and processes. Such dimensions are for data quality. Such composite measure enables measured qualitatively using survey methods (Zhang organizations to track changes in data quality over et al., 2005; Lemire et al., 2009). Some authors have time. suggested benchmarking methods, mainly for a 3. Data Quality Dimensions quality comparison, wherein data quality is evaluated against benchmarks from the leading organizations. There are several quality dimensions defined in This enables the organization to understand where the literature. A recent and comprehensive survey on their data quality stands in comparison to their peers data quality dimensions across the various disciplines (Batini et.al., 2009). was conducted by Carvalhoa, et.al., (2025). They RBI Bulletin October 2025 211ARTICLE Compliance to Confidence: A Data Quality Model for Central Banks surveyed and listed almost all quality dimensions or cannot be easily accessed, or appear to conflict in their paper, as there is no consensus on the with other data. Thus, quality is viewed as a multi- determination of data quality dimensions. They faceted concept (Enrico and Ward,2004). Therefore, identified around 66 quality dimensions, allowing organizations defined their data quality dimensions for users to suitably selecting the dimensions and the depends on data collection and dissemination needs development of data quality frameworks. Research in and usage. The number of quality dimensions also can this field suggests that different dimensions provide vary according to the nature and type of data collected different perspectives or have different dependencies or disseminated. These quality criteria or dimension based on the purpose of the data. Central banks and reflects an inclusive approach to quality definition multilateral institutions have specified around 14 and assessment. quality dimensions in their data quality frameworks. Based on the data quality frameworks and quality Some of the commonly used data quality dimensions dimensions reviewed across the literature, this article by various organizations across different countries presented eight data quality dimensions which are listed in Table-1. comprehensive and takes care of data quality issues ‘Fitness for use’ is a broader definition of data largely, encompassing collection and dissemination of quality which depends on the purpose, needs and data. Central banks or the regulators typically design a priorities, and user perspectives of the required data collection format with a clear objective to gather, data. These requirements can vary across group of analyze and monitor economic and financial data. They users. Even though data is accurate, it need not be of also keep the purpose and goals of data collection in good quality if they produced too late to be useful, mind, with proper identification of relevant sources Table1: Various Dimensions of Data Quality Sr.No Dimensions of quality Bank of European OECD Australian Federal statistical Government of England Central Bank# bureau of office of Canada statistics Germany 1 Punctuality and timeliness ü ü ü ü ü ü 2 Accuracy ü ü ü ü ü ü 3 Credibility ü 4 Accessibility/clarity ü ü ü ü ü 5 Consistency ü 6 Interpretability ü ü ü 7 Relevance ü ü ü ü 8 Coherence ü ü ü ü 9 Completeness ü ü 10 Stability ü 11 Plausibility ü 12 Reliability ü ü 13 Comparability ü ü 14 Cost-efficiency* ü Notes: i. Some organisations are used punctuality and timeliness together and some are used separately in their data quality framework. ii. * OECD does not consider cost-efficiency as a dimension of quality, while it is a factor taken into account in any analysis of quality as it can affect quality in all dimensions. iii. # Dimensions ae relating to supervisory data quality farmwork Source: Compiled by the authors from the websites of the various organisations. 212 RBI Bulletin October 2025Compliance to Confidence: A Data Quality Model for Central Banks ARTICLE and variables. The nomenclature of the data formats In a standard data quality framework, the often differs from country to country. For instance, following formula may be used for measuring the the European Central Bank named their data format timeliness dimension: as ‘reporting templates’ or ‘data templates’. The n ( ) r (1) Federal Reserve uses the term ‘call report’, and the n d Bank of England’s data format is ‘statistical return’. Twimheelrien, enss r iTs t h=e n +u m nrb ×e r1 0o0f returns submitted The Reserve Bank of Australia uses ‘statistical forms’ within the prescribed time and n is the number of d to collect economic and financial data which are returns submitted with a delay, i.e. after the prescribed then used to produce various statistical releases and time. This percentage measure should be weighted tables. In the Indian context, the Reserve Bank uses appropriately in the data quality index calculation. a template called ‘Return’ for collecting statistical 3.2 Accuracy or regulatory data for the REs. For convenience, The accuracy dimension of data quality is the terminology ‘Return’ is used throughout this generally measured by the correctness or exactness article. With this background, the following quality of the of the data submitted by the REs. In a data dimensions provides an inclusive assessment of data filing process, the accuracy of the data determines quality. the quality of the overall data filed by the entities. 3.1 Timeliness Accuracy reflects the real data which should have The timeliness dimension is sometimes used desirable characteristics such as being free from errors interchangeably with punctuality, or both are used and deviations, closeness to the true value, and high together as ‘punctuality and timeliness’. In either precision. However, this is difficult to measure, as case, the important aspect of data quality is the timely it is theoretically defined as the difference between availability of the data. The timeliness dimension estimated values and the true (unknown) values. mainly evaluates whether the statistics intended to Data revisions can give a good assessment of accuracy be collected by the organization have been received since they provide a mechanism for determining on time as per the prescribed timeline. Adherence to how estimates change over time as they approach deadline for filing the data by the REs is vital, as the their ‘final’ value (OECD, 2003). This approach is timely availability of data is important – especially particularly suitable for capturing accuracy of the when a particular data set relates to any other data, or data filed by the REs, as revisions are common in data it is to be read along with another set of data. reporting, especially in banking or financial sector. Sometimes timeliness referred to as how up The extent of revision determines the quality of to date the data is or how current the data is when the data–whether the change is minimal or substantial. produced or reported–connected to relevance of the If the change is significant from the initial filing of data. Both approaches are used to assess whether data the same data, then it is certainly a quality issue. It is provided or reported at the expected time. Typically, is also important to determine whether change is this measure is expressed as a ratio considering the genuine or due to a data error. Moreover, the refiling timely availability of data relative to the total data or resubmission of data is not necessarily due to the being collected. Organizations generally prescribe actual revisions. Validation failure can sometime lead timelines for submitting returns. The return may be to failure in data filing, requiring the REs to resubmit of any form–supervisory, regulatory, or statistical. the file. RBI Bulletin October 2025 213ARTICLE Compliance to Confidence: A Data Quality Model for Central Banks In a data quality framework, the accuracy Generally, regulators have control over the third dimension should check the number of times the process, as the data submission channels are provided data is revised and the magnitude of revision during by the regulator. However, the first two processes a reporting period based on a key indicator. A revision are often not visible to the regulator. To assess them, is defined as the difference between a later and an data auditors visit entities or request information via earlier estimate of the same key item. Considering surveys. these aspects, a formula for accuracy dimension may The granular data is captured through the online be defined as follows: transaction processing systems (OLTP) or other Let ‘u’ denote the total number of times a automated systems such as core banking systems particular reporting entity had to resubmit a specific (CBS), treasury operations systems (TOS), etc. which return in a given reporting period, ‘v’ denotes the are linked to the data warehouse (DW) of the REs. The number of times validation failures occurred for a data aggregation or return generation process occurs particular return for a particular reporting entity, and either in the DW or through management information ‘w’ denote the number of resubmissions not due to system (MIS) using various programs with business validation failures, such that u v w. logics to extract the data. Part of the aggregation sometimes manually performed by punching data Relative mean absolute =rev+ision (RMAR) is into predefined data templates. These processes are calculated for all resubmissions u (resubmission expected to be in an automatic manner to increase due to validation failure, v and other than validation the credibility of the data collection mechanism. The failure, w) using the below mentioned formula: third level of data process is the data transmission ∑ Z – Z level where various channels being used for filing RMAR u f l (2) u ∑ Z u f returns. These includes system-to-system channel, file whe=r e, Z is the value reported in the first upload channel, application programming interface f submission and Z is the last value (final value (API) based channel, and web based or screen-based l submitted for the key aggregate Z submission channels. Among these, system-to-system and API based channels ensure fully automated if RMAR Then, Accuracy (Ac)= (3) (RMAR u ) u data submission process offering the most credible 0 > 1 3.3 Credibility �100 – ×100 otherwise means for data submission. The credibility measure is qualitative in nature and is derived based on the Credibility measures the degree of trustworthiness scores given to the REs for their return filing process of the entire data generation and submission process as described above. A scoring matrix suggested for of a return. It assesses whether all data have been measuring credibility is given in Table-2. produced in an automated manner without manual intervention. The credibility of the data provided Return wise scores for DGP and GAP may be by the REs depends mainly on three aspects of data obtained from the REs while the DTP score can be process. obtained from the data submission system provided by the regulators. Finally, a weighted average score may (i) the extent of automation in granular level data be derived for determining the credibility dimension. capturing mechanisms, (ii) automation of data aggregation and calculations 3.4 Consistency process to meet the regulatory requirements; and The consistency dimension of the data quality (iii) automation of data transmission process. checks the violation of various validation rules 214 RBI Bulletin October 2025Compliance to Confidence: A Data Quality Model for Central Banks ARTICLE Table 2: Credibility Scoring Matrix Level of Automation Category < 30 percent 30-50 percent 50-80 percent > 80 percent Data generation process (DGP) 30 50 80 100 Data aggregation process (DAP) 30 50 80 100 Channels of Data Submission Data transmission process (DTP) system-to-system API File upload Web based/others Scores 100 100 80 60 Notes: i. The scores are need not be fixed and can vary according to importance /levels of automation sets by the organisations. ii. Percent of automation is to be obtained based on the number of returns automated in each process (DGP and DAP) including business validations. The data items can be 3.5 Completeness relational or static in a data file (Batini & Scannapieca, Completeness is a qualitative measure of data 2006). A data template is typically relational1 in nature quality which describes the extent to which data implying several numbers/cells are interconnected values are sufficiently populated using the given and involve calculations. The consistency dimension information/guidelines/ definitions, etc. The data checks whether the data appearing across the format populating process consist of data aggregation follows the logical and arithmetic operations and which involves arithmetical or logical calculations. whether the requisite data point is reported across Primarily, REs populates the required data through an multiple sheets or returns. These are termed integrity automated process or with some manual intervention. As the REs operate at different levels of technological constrains, which are properties that must be satisfied environments, proper guidance for return preparation by all instances of a database schema. is very essential for them to streamline their return In a data submission process–when same data preparation activities. Generally, regulator provides point or data element is required to be submitted necessary guidelines, data definitions, compilation in different returns, and the data pertains to same manuals, updates on regulatory changes and changes reporting period, then it is expected that the same in data requirements etc., through circulars and press value is reported across all returns. Here the data releases. The REs is also expected to maintain such point reported may be consistent across the returns. documents, and track the information provided to them on various returns. It is advisable to maintain Let c be the number of datapoints which are e a compilation manual or procedural document for reported across multiple returns. If c is the number of t each return preparation process. This document also datapoints (out of c ) which are reported during data e serves as a business continuity document for the submission which not matching across the returns. REs. Considering all these aspects and availability of Thean a return consistency (Co) may be arrived requisite documents at the REs, a qualitative measure as follows: of completeness dimension can be developed, providing appropriate scores to the REs. c Co e (4) c t Completeness can be also measured quantitatively 1 Ev= e n i f× th 1 e 0 da0 ta are not relational, consistency rules can be defined. For considering data gaps, missing observations, instance, in the case of a questionnaire format, semantic rules are defined calculation errors, etc. Here it refers to the extent in a way similar to relational constrains (Atzeni, & De Antonellis,1993; Batini & Scannapieca, 2006). to which users receive all the data without missing RBI Bulletin October 2025 215ARTICLE Compliance to Confidence: A Data Quality Model for Central Banks templates and missing values and the data are whether data is relevant depending on the situation accompanied by related metadata. This includes both and the user’s needs. Regular data user surveys and the dataset and additional information that helps interaction will provide input to the data managers or users to understand the dataset in their specific auditors who may provide score for this dimension by contexts. The qualitative completeness dimension is building appropriate scoring matrix. maninly applicable to the evaluation of the quality of 3.7 Stability data dissemination process The stability dimension of data quality indicates Both types of measures assess different aspects of how data remain consistent and reliable over time. It completeness, and they serve to provide a more holistic reflects the ability of the data maintains its integrity understanding of how data is complete or incomplete. and usefulness over various time periods, ensuring In the case of quantitative measures, some of the changes in the dataset are tracked and controlled characteristics of completeness one should look at without affecting its quality. Stability dimension is are empty records, attribute completeness and entity measured either qualitatively or using quantitative completeness. Weighted completeness can be arrived metrics depending on the context and type of data. giving appropriate weights to each characteristic of Qualitative measures can be arrived based user completeness. Technical score relating to each quality feedback or expert assessments. For instance, some aspects of completeness may be assessed by data of the characteristics like usability, traceability2, and auditors in the organisation how well the data has performed or used in real applications or analytical exercise of the data may 3.6 Relevance be assessed. If the data users continuously find that Another important dimension of data quality is data is reliable and consistent, the data is likely to be the relevance dimension, which refers to the degree considered as stable. to which the data is appropriate, useful, and its In a quantitative aspect, measures such as data applicability for a specific purpose. If data produced drift, consistency ratio, and change rate can be used to or disseminated by a central bank is not relevant assess the stability dimension of data. These simple for the intended users, it cannot effectively support measures often involve numerical calculations using policy making and analysis. This dimension is used formulas. For example, the data drift indicating the to evaluate the quality of the data disseminated by change in data over time measured by comparing the the organization. The relevance of data depends on data distributions at different points of time using the whether it provides useful insights to the users who divergence measures like Kullback–Leibler divergence wants to obtain their desired level of information. or Jensen–Shannon divergence (Csiszar, I. 1975; The relevance dimension is often qualitative, and Nielsen, F. 2021). Similarly, data consistency ratio it evaluates how well the data meets the needs of provides the proportion of consistent data points over users or stakeholders. The disseminated data should time. An alternative measure would be the change align with the context– which means that data must rate which is measured by the ratio of number of data relate to the domain and purpose of the analysis. changes during a period and total data point for the The data must be up-to-date, usable, and actionable same period. This measure will tell the user that how for decision making. Using this dimension of quality, quickly data changes over time. the data managers or auditors can make a qualitative 2 Traceability means availability of time series data implying the ability to assessment of the data being collected and check track the history of data from its origin to its present period. 216 RBI Bulletin October 2025Compliance to Confidence: A Data Quality Model for Central Banks ARTICLE 3.8 Accessibility Typically, returns are submitted by the REs at different frequencies, i.e., weekly, fortnightly, The accessibility is another important dimension monthly, half-yearly, etc. The regulator needs to of data quality which refers to the ease with which data can be accessed, retrieved, and utilized by the users decide the frequency of the DQI to be calculated i.e., when needed. It also refers to the metadata availability either monthly or quarterly. All returns falling in to users, including the form or medium through the desired period may be considered for calculating which information is accessed, data security features, DQI. If someone has to calculate DQI on a monthly and interoperability. The assistance provided to users or quarterly basis, all returns which are falling in that may be adequate to get the complete information month or quarter irrespective of the frequency of the about data and its accessibility. Although the data returns may be considered. possess the other quality dimensions like accuracy, Let (f f f ) be the set of different frequencies timeliness, and completeness indicating high-quality (weekly, fortnightly, monthly, quarterly, etc.) of data, it is not valuable unless it is accessible to the 1 , 2 ,…, P p returns/publications falling in a month. The data data users in an easy manner whenever required. This quality index to be constructed should cover all these dimension is commonly measured using qualitative criteria–conducting periodic feedback surveys by the returns of the p frequencies in a month. data mangers or data auditors. Data users’ feedback Let E be the set of REs submitting return to the i is very important criteria to arrive the accessibility organization, i l R is the set of returns filed j dimension of data quality. Feedback surveys can be by the REs, j m., and D is the set of quality conducted for the users of data (both dissemination = 1,2, …,., k dimensions under consideration, n. For the and collection). This dimension also checks for the = 1,2,…, calculation of a data quality index, the data analyst availability of support to the users on the data portal, k = 1,2,…, has to determine the triplet: (E R D ) i l ease of access and easiness navigating around the data i j k j m k n portal. , , ; = 1,2,...,; 4. Data Quality Index- Methodology = 1T,2h,…e ,qu;a lit=y 1 d,2im,…e,ns.ion scores for triplet (E i ,R j,D k) measured for ith entity, jth return, and kth dimension is Using the various data quality dimension denoted by d . These scores are then aggregated with estimated, one can arrive at a weighted measure of ijk appropriate weights w for arriving am entity-return data quality in the form of an index. Construction of k data quality index, DQI (ER) and is defined as follows: such an index enable central banks to monitor data i j quality progress, identify areas for improvement for DQI(E, R) n w d (5) i j N k k ijk each return/publication, and ensure reliable decision- 1 where N = ∑w=1 k , appropriate weights for each making. The quality dimensions can be weighted dimension depend on the regulators data collection according to the importance of each dimension = ∑ process and systems and their relative importance. estimated. The weights need not be fixed and can In the Indian context, according to Verma & Nandi vary according to the importance of the data quality (2017), accuracy was the most important data quality dimensions set by the organizations. The applicability dimension (31.25%), followed by consistency (21.25%), of the dimensions is distinct for data collection and data dissemination processes. The organization can timeliness (20%) and completeness (11.25%). The select suitable quality dimensions for the construction study also considered uniqueness with a weightage of a data quality indices for both data collection and of (16.25%) which is closely related to credibility dissemination processes. dimension. RBI Bulletin October 2025 217ARTICLE Compliance to Confidence: A Data Quality Model for Central Banks 4.1 Entity Level DQI Even though the data collection process of a Central bank is operating in a centralized environment, there The entity level DQI may be arrived by aggregating are multiple departments/verticals/domains that take returns quality indices with appropriate weights based care of different sets of data. For example, foreign on the number of datapoints/cells of a particular exchange market data is collected and published return3. The entity level DQI is denoted by DQI(E) and i by the foreign exchange department, which is the is defined as follows: domain owner of forex related data and returns. DQI(E i) N m j α j DQI(E iR j) (6) Similarly, banking data is collected and disseminated 1 by the banking department or regulatory department. where α=j ar ∑e =t1h e weight s based on the number data The department-level or domain-level data quality points/cells submitted by an entity E for a return R. indices can be also estimated by grouping the Entities which are filing more data points will have returns which are applicable to a department or proportionate weights in α .N α. j j domain. Accordingly, a weighted average DQI can be 4.2 Return Level DQI = ∑ derived considering the number of data points/cells The return level DQI may be arrived by weighting submitted by a regulatory entity to a department or the overall business profile of the entity. The weights vertical. Such a department-level data quality index may be derived using the share of total banking can be used for comparisons between different business undertaken by the entity, E to the overall departments or domains. This will enable monitoring banking business, is a key indicator to give relative of data collection quality concerning divergent returns importance to the entity4E. handled by different domains/departments of the central banks. The return level DQI(R) may be calculated as j Following the DQI methodology mentioned in follows: this article, dissemination quality indices can also DQI(R) l β DQI(E R) (7) j N i i i j be derived considering each statistical tables (similar 1 where β =i is t∑he=1 w eight s b ased on the entities business, to return) or for a publication (consisting multiple N β. tables) using appropriate dimensions and weights. i Adopting the approaches provided in this article may 4. 3= ∑Computation of DQI at the Regulators be useful for the organizations to institutionalize An enterprise level data quality index can be their data quality measurements and enhance overall derived by aggregating either entity-level DQI or data quality framework and enhancing overall data return level-DQI. Accordingly, an enterprise level DQI, governance. denoted by DQI and is defined as follows: EPlevel 4. 4 Interpretation of the DQI DQI (l,m) δ DQI (ER) ) (8) EP level N h h h (h) The DQI can provide a single measure of overall 1 where N = ∑δ h= ,1 depend ing, on the choice of entity data quality, considering the importance of each weights or returns weights for arriving an enterprise dimension and the frequency with which the data is = ∑ level DQI. used. It is desirable to have thresholds for the DQI to categorize the data. A DQI score closer to 100 (≥ 3 If same set of returns are applicable for all REs. In case the returns are different for different entities, return weights may be calculated for the 80) suggests excellent data quality, while lower scores returns applicable to a particular entity only. indicate areas for improvement. If 70 ≤ DQI < 80, 4 This may be proxied by the sum of aggregate deposit and total credit from the previous financial year for banks. then data quality is good, while if DQI < 70, the 218 RBI Bulletin October 2025Compliance to Confidence: A Data Quality Model for Central Banks ARTICLE organization needs improvement in their data quality. and Improvement”, ACM Computing Surveys, 41(3):1- The same criteria can also be used for any dimensions 41. or any levels of DQI Batini,C. and Scannapieca, M.(2006), “Data Quality 5. Conclusion Concepts, Methodologies and Techniques”, Springer- Verlag, Berlin Heidelberg. This paper reviews various data quality Carvalhoa,A.M., Soaresb, S., Montenegrob, J. and dimensions across the literature and provides a robust Conceiçaob,L. (2025). “Data Quality: revisiting and scalable framework for selecting contextual and dimensions towards new framework development”, content-dependent data quality dimensions and Procedia Computer Science 253, 247–256. their estimation. This will facilitate central banks or organizations to adopt and implement suitable Chandola, V., Banerjee, A., and Kumar, V. (2009), data quality dimensions and a data quality index at “Anomaly Detection: A Survey”, ACM Computing various levels for monitoring and improving their Surveys, 41(3):1-58. data quality. Even though, the article suggests eight Csiszar, I (1975). I-Divergence Geometry of Probability quality dimensions and two distinct approaches for Distributions and Minimization Problems”. Annals of the data collection and dissemination processes, Probability. 3 (1): 146–158. organizations may employ either process depending Enrico, G. and Ward, D. (2004). “Quality framework on their domain of operations. for OECD statistics getting our own house in order”, Additional information at the organizations/ paper presented in the conference on data quality for department/vertical levels can also incorporated international organizations, Germany, May 2004. into the data quality dimensions with appropriate Fadahunsi, K. P., Akinlua, J. T., O Connor, S., Wark, P. weights. The weighting patterns given in the article A., and Gallagher, J. (2019), “Protocol for a systematic are not strictly applicable to organizations, it is left to review and qualitative synthesis of information the organizations to decide upon their processes and quality frameworks in eHealth”, BMJ Open, 9(3). systems. Garreitt, J., Hoitash. R and Prawitt,D.F. (2014), “Trust While the data quality management is a and Financial Reporting Quality” Journal of Accounting continuous process, the framework provided in Research, 52 (5). this article can serve as a benchmark for the other Girard, M. (2020), “Helping Organizations Master financial institutions or data-driven policymakers Data Governance”, Policy Brief No. 163, Centre for aiming to integrate data quality into their data International Governance Innovation. governance strategies. This article contributes to the IMF (2003), “Data quality Assessment Framework and ongoing discourse on the enhancement of data quality Data Quality Program”, International Monetary Fund, framework within central banks and other data-driven Washington. organizations. Khatri, V. and Brown, C. V. (2010), “Designing data References governance”, Communications of the ACM,53(1):148- Atzeni, P. and De Antonellis, V. (1993), “Relational 152. Database Theory”, The Benjamin Publishing Company. 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(1996), “Beyond accuracy: Problems and Current Approaches”, IEEE Transactions What data quality means to data consumers”, Journal on Knowledge and Data Engineering, 11(4):147-162. of Management Information System, 12(4). RBI (2025). “Supervisory Data Quality Index for Zhang, S., Lee, K. P., and Chen, D. (2005), “Measuring Scheduled Commercial Banks”, Reserve Bank of India, Perceived Data Quality”, Data and Knowledge Press release March 2025. Engineering, 55(3): 289-319. 220 RBI Bulletin October 2025Steel Under Siege: Understanding the Impact of Dumping on India ARTICLE Steel Under Siege: China, Japan, Vietnam etc. led to dumping2 of cheap steel which dampened domestic steel production.3 Understanding the Impact of With sluggish economic growth anticipated in China Dumping on India and other major steel-producing and consuming regions, cross-border trade in steel is increasingly by Anirban Sanyal and Sanjay Singh^ being redirected towards high-growth markets, like India. Further, the imposition of new tariffs on steel India’s steel sector faced significant headwinds due imports by the US enhances the threat of dumping. to cheap imports and dumping from major global steel Against this backdrop, this article empirically producers during 2023-24 and 2024-25. This article validates and estimates the impact of cheap imports analyses the impact of cheap imports on India’s domestic on India’s domestic production and consumption production and consumption of steel using structural of steel. Additionally, the elasticity of steel imports vector autoregression and panel data regression models. with regard to its import prices is also estimated Empirical estimates indicate that steel imports have to understand the sensitivity of the global prices seen a surge largely driven by lower import price of steel with adverse implications for domestic steel production. on India’s steel import intensity. The article uses Further, price elasticity of India’s steel imports varies in monthly data from April 2013 till March 20254. Unit the range of (-) 0.73 to (-) 1.01. value index (UVI)5 of iron and steel imports has been used to instrument the import intensity of steel and Introduction evaluate the impact of dumping. Further, the elasticity India is a major consumer of finished steel with of steel imports is derived using destination-wise the consumption demand scaling new heights in imports of iron & steel and corresponding UVI under the recent period. Steel-intensive construction and a panel data regression framework. The findings infrastructure development in India are the key suggest that the lower price of imported steel contributors to the rising demand for steel. During increased steel imports which facilitated to meet the 2022-23 to 2024-25, India’s steel consumption grew growing consumption demand of steel, and domestic more than 13 per cent in FY: 2022-23 and FY: 2023-24. production got adversely affected. Lastly, the panel The consumption growth clocked 11.5 per cent on YoY regression estimates using destination-wise imports basis in FY: 2024-251. The domestic steel production data shows a high and significant elasticity of import grew at 9.3 per cent and 12.5 per cent in the previous two financial years but the production growth 2 Steel dumping refers to the export of steel by one country to another at prices lower than its domestic market or production cost, often due to slowed to 6.8 per cent in FY 2024-25. The high subsidies or overproduction. In recent times, India has faced significant consumption growth was facilitated through cheaper challenges from steel dumping, particularly from countries, like, China, Thailand, Vietnam, South Korea, and Russia, which have flooded the imports. Indian market with cheap steel. This practice threatened the domestic steel industry by undercutting local producers and leading to reduced Moderate price in the global market, excess profitability across the sector. capacity across major steel producing countries like 3 According to ICRA (2024), in 2024-25, India’s domestic steel industry’s capacity utilisation may have dropped below 80 per cent for the first time ^The authors are Assistant Adviser and Director, respectively, in the in four years, as cheaper imports flood the market. Department of Statistics and Information Management, Reserve Bank of 4 The analysis uses the domestic steel production data from the Eight India. Views expressed in the article are those of the authors and do not Core Industries which is available from April 2012 onwards. Accordingly, reflect the views of the Reserve Bank of India. the YoY growth rate of domestic production is derived from April 2013 1 According to CRISIL’s Market Intelligence and Analytics report (2025), onwards. India is projected to surpass other major steel-consuming economies in 5 The unit value index of imports measures changes in the average cost 2025, with demand growth estimated at 8-9 per cent. of imported goods. RBI Bulletin September 2025 221ARTICLE Steel Under Siege: Understanding the Impact of Dumping on India price on India’s steel imports suggesting a strong intermediate goods. is the production share of impact of global price movements on India’s steel home-produced intermediate goods. > denotes α imports. home-bias. α The rest of the article is organised as follows – The second stage of the production process Section 2 outlines the empirical framework; Section involves production of final goods using standard 3 discusses the data and stylised facts. The findings Cobb-Douglas production function: are discussed in Section 4. Section 5 summarises the … (3) findings and major policy implications. 2. Empirical Framework where, is the final goods produced, is the labour demand and is the capital used. is the share of The linkage between global price changes and labour – capital, whereas is the labour share in the import intensity can be viewed through the firms’ nested production function of labour and capital. optimal factor allocations under a nested production is the total factor productivity. The firm is a price function framework where steel is used as an input. taker in the intermediate goods market. The requirement of steel is met through domestic sourcing and imports. Mathematically, India’s steel Following the profit maximization of the firm, consumption is modelled through the production the optimal factor allocations of the intermediate framework of a small open economy model proposed goods is given by6: by Gali and Monacelli (2005). In this framework, a two … (4) stage production function is assumed – in the first stage, intermediate goods (such as steel) are procured from home country and abroad (i.e., imports); in … (5) the second stage, the aggregated intermediate goods where, is the price of the domestic basket is used to produce the final good. The first stage [foreign produced] intermediate goods of variety ‘u’, of the production process is represented as follows: is the aggregate price of the home (foreign)- … (1) produced intermediate goods bundle, is the suitable where, is the intermediate goods bundle used exchange rate and is the marginal cost of home- in the second stage, represents intermediate produced final goods. and are derived as: goods sourced from home country and represents and imported intermediate goods. The domestically produced and imported intermediate goods are … (6) aggregates of various goods using a constant elasticity Producers prefer imported steel over of substitution aggregator, i.e., domestically-produced steel as the intermediate input and for production owing to its lower price in the global market. While this eases marginal cost pressures for … (2) 6 These conditions can be derived by maximizing profit. The optimal factor allocations are the shares of the output, and the allocation of various where, and are the elasticities of substitution varieties is derived from the constant elasticity of substitution (CES) aggregator. Here, the assumption is that the foreign intermediate goods of domestic and foreign produced varieties of are invoiced in producer currency. 222 RBI Bulletin September 2025Steel Under Siege: Understanding the Impact of Dumping on India ARTICLE the producers, domestic steel production is adversely impacted as the demand of domestic produced steel moderates and domestic producers react to lower where, is steel imports from destination demand through market clearing conditions. ‘i’, is the unit value index of imports from country ‘i’, is the vector of macroeconomic controls A structural vector autoregression (SVAR) model which includes lagged values of consumption growth, is used to analyse the impact of steel imports on domestic production and input cost pressure and India’s domestic steel production and consumption. is the residual term. Fixed effects, namely, source As indicated earlier, the UVI of iron & steel imports is country and time effects, are used to absorb the used as an external instrument following Olea, Stock unobserved heterogeneity. and Watson (2021), while the endogenous variables in the model are volume growth of steel imports, 3. Data and Stylised Facts wholesale price index (WPI) of steel7, domestic steel The empirical analysis is carried out using production and steel consumption. The variables monthly data from April 2013 to April 2025. India’s are transformed into YoY growth rates for the SVAR steel consumption grew by 12.9 per cent on average estimates.8 (average of monthly growth rates) since April 2022 In the second part of the analysis, the import till November 2024. The gap between domestic elasticity is estimated using a panel data regression consumption and production widened since 2022 framework with steel import destinations as the (Chart 1a). Steel prices eased since April 2022 both in cross-sectional unit. Here, the reduced form panel the domestic and global fronts. The UVI of imported regression follows the Ricardian trade framework and iron and steel moderated sharper than WPI-steel can be expressed as follows: (Chart 1b). Chart 1: Steel Production, Consumption and Prices a. Production And Consumption (YoY Growth in Per Cent) 25 20 15 10 5 0 Production Consumption 7 Derived by aggregating the price indices of various steel products. 8 The optimal lag length for the SVAR model is arrived at using Hannan-Quinn (HQ) and Bayesian information criteria. RBI Bulletin September 2025 223 22-rpA 22-luJ 22-tcO 32-naJ 32-rpA 32-luJ 32-tcO 42-naJ 42-rpA 42-luJ 42-tcO 52-naJ 52-rpA b. Steel Prices: Domestic Vs. International Index value(Apr 2022 = 100) 120 100 80 60 40 20 0 22-rpA 22-guA 22-ceD 32-rpA 32-guA 32-ceD 42-rpA 42-guA 42-ceD 52-rpA UVI Iron and Steel WPI SteelARTICLE Steel Under Siege: Understanding the Impact of Dumping on India India imported steel products to supplement its consumption demand. India’s iron and steel imports expanded by 10.7 per cent in the first half of 2024-25 and recorded a contraction in second half of 2024- 25 mainly on account of safeguard duties. India recorded a high growth of 22.0 per cent in its steel imports in 2023-24 fuelled by softer steel prices in the international market (Chart 2). India imports nearly 45 per cent of steel from the top 5 destinations namely Korea Republic (South) (import share 14.6 per cent), China (import share 9.8 per cent), USA (import share 7.8 per cent), Japan (import share 7.1 per cent) and the United Kingdom (import share 6.2 per cent)9. Imports increased from China, Japan, South Korea, Indonesia and Vietnam during 2024-25 (Chart 3a). UVI declined or remained production and final consumption of steel. However, unchanged across all major import destinations, the import intensity can be influenced by other barring USA and South Korea (Chart 3b). factors such as the global price of steel. Hence, the 4. Empirical Findings UVI of iron & steel imports is used as an external The SVAR model estimates the endogenous time instrument in the econometric framework to gauge dynamics among imports, domestic prices, domestic import intensity driven by import prices. With an Chart 3: Major Import Destinations and Unit Value Index of India’s Steel Imports a. Major Steel Import Destinations b. Unit Value Of Imports of Iron & Steel Across Destinations 70.0 (Unit Value Index) 60.0 50.0 40.0 30.0 20.0 10.0 0.0 9 The share is average share over April 2022 till August 2024. 224 RBI Bulletin September 2025 22-rpA 22-luJ 22-tcO 32-naJ 32-rpA 32-luJ 32-tcO 42-naJ 42-rpA 42-luJ 42-tcO 52-naJ 52-rpA 3000 2500 2000 1500 1000 500 0 Canada Japan UK Russia Vietnam Indonesia China USA Korea Republic (South) adanaC manteiV htuoS aeroK napaJ aisenodnI anihC KU aissuR ASU Chart 2: India’s Iron And Steel Imports (Volume) (In '000 tonnes, YoY growth in per cent) 3000 200 2500 150 2000 100 1500 50 1000 0 500 -50 0 -100 Volume in '000 Tonnes YoY Growth (RHS) 2022-23 2023-24 2024-25 22-rpA 22-nuJ 22-guA 22-tcO 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpASteel Under Siege: Understanding the Impact of Dumping on India ARTICLE moderating its domestic price11. The domestic Table 1: Impact of UVI on the Steel Imports production of steel moderates with a lag of 8-10 Model 1 Model 2 Model 3 Model 4 months as the domestic producers struggle to match Dependent variable: Import growth in steel (YoY Growth) up with the lower price of imported steel. The (Intercept) 0.82 0.87 -4.57 -0.41 (3.32) (3.38) (3.18) (3.38) domestic consumption of steel, on the other hand, UVI -0.57 *** -0.57 *** -1.41 *** -1.33 *** improves with a lag of 5-7 months, owing to cheaper (0.12) (0.12) (0.18) (0.18) steel imports leading to a drop in the price of final Steel consumption 0.01 0.07 0.07 growth (-1) (0.05) (0.05) (0.05) goods (Chart 4). WPI of steel 2.60 *** 2.97 *** products (-1) (0.45) (0.45) Next, the import price elasticity of steel based COVID -26.11 ** on UVI is validated using the destination-wise (8.65) R2 0.14 0.14 0.31 0.36 detailed data on steel imports spanning over same Adj. R2 0.13 0.13 0.30 0.34 time period. Lagged values of consumption growth, F-Stat 21.7*** 10.9*** 20.2*** 18.3*** domestic production and input cost pressure are Notes: 1. The above estimates are derived using OLS with HAC Type -3 used as additional controls to factor in domestic adjustments. 2. COVID is a time dummy, which takes value ‘1’ for April 2020 to macroeconomic developments. Alternate estimation July 2021 otherwise ‘0’. 3. Figures in parentheses are robust standard errors. methods are used, viz., OLS regression, mean group 4. All variables are transformed in YoY growth except COVID. estimate, panel data fixed effects and random 5. *: p < 0.1, **: p < 0.05, ***: p < 0.01 effects. Unlike the SVAR model, the import elasticity easing in UVI, the import intensity is expected to is derived through the effects of the log of UVI on log increase. In order to check the relation between values of imports. This specification is used to derive UVI and imports, growth in the import volume the elasticity from the estimated coefficient i.e. was regressed over UVI controlling for factors such the coefficient indicates the change in log imports as domestic consumption growth and prices. The in response to unit change in log UVI which is the coefficient of UVI is negative and significant, which import elasticity. supports the hypothesis pertaining to the price The estimates show a negative and significant channel (Table 1).10 elasticity of UVI on imports, i.e., when the UVI goes Following the validation of UVI as an instrument up, the import intensity of steel goes down. The for import growth, the SVAR model is estimated with average price elasticity of steel imports is estimated UVI as an external instrument. The assessment of to vary within 0.78 – 1.01. Further, the consumption the UVI impact is carried out through the impulse growth provides the impetus for imports, whereas response functions. One standard deviation (SD) of domestic production dampens import intensity. negative shock on UVI increases the import volume. Higher interlinkages through input-output channels Higher imports at a cheaper price reduces the within the sector are absorbed within the aggregate demand for domestically produced steel, thereby impact (Table 2). 10 The F-statistic of the regression estimates are higher in magnitude and are statistically significant, thus satisfying the criteria of a good instrument. 11 The moderation in the domestic prices is driven by the lower import This follows Angrist and Pischke (2009) and Wooldridge (2010). prices and demand moderation in the domestic front. RBI Bulletin September 2025 225ARTICLE Steel Under Siege: Understanding the Impact of Dumping on India Chart 4: Impulse Response of One SD Negative Shock to UVI A robustness of the coefficients is validated using similar lines. The average price elasticity stands in inverse hyperbolic sine (asinh) transformation12. the range 0.73 – 0.89 (Table 3). Using the asinh transformation, the estimates fall in Table 2: Panel Regression Estimates Estimating Import Price Elasticity of Steel (1) (2) (3) (4) (5) (6) (7) (8) log(Imports) log(Imports) log(Imports) log(Imports) log(UVI) -0.825*** -0.779*** -1.423*** -1.101*** -0.940* -0.924* -0.939** -0.923* (0.081) (0.087) (0.125) (0.302) (0.415) (0.487) (0.414) (0.486) ∆ Consumption (-1) 0.006 0.004*** 0.007 0.007* (0.004) (0.001) (0.004) (0.004) ∆ WPI Steel (-1) -0.003 -0.001 -0.001 -0.001 (0.002) (0.001) (0.004) (0.002) ∆ Production(-1) -0.009 -0.005** -0.010 -0.010* (0.006) (0.002) (0.006) (0.006) Constant 16.059*** 15.772*** 20.313*** 18.124*** 16.804*** 16.707*** 16.800*** 16.703*** (0.545) (0.584) (0.508) (2.187) (2.804) (3.271) (2.823) (3.248) OLS Mean Group Fixed Effect Random Effect 12 Asinh transformation is widely used in the trade literature to adjust for the zero trade values as the monthly imports may be zero for some trade partners for some months. However, one of the major criticism of using the inverse hyperbolic sine transformation is that it induces extra skewness in the distribution (Bellemare and Wichman, 2020). However, it may be noted here that the distribution share of India’s steel imports remained steady over time which reduced the chances of higher skewness in imports distribution. 226 RBI Bulletin September 2025Steel Under Siege: Understanding the Impact of Dumping on India ARTICLE Table 3: Panel Regression Estimates for Price Elasticity with Asinh Transformation (1) (2) (3) (4) (5) (6) (7) (8) asinh(Imports) asinh(Imports) asinh(Imports) asinh(Imports) log(UVI) -0.805*** -0.729*** -1.416*** -1.004*** -0.904* -0.894* -0.901** -0.881* (0.080) (0.083) (0.121) (0.291) (0.411) (0.479) (0.410) (0.413) ∆ Consumption (-1) 0.004 0.005*** 0.006 0.006* (0.004) (0.001) (0.004) (0.004) ∆ WPI Steel (-1) -0.003 -0.001 -0.001 -0.001 (0.002) (0.001) (0.004) (0.002) ∆ Production(-1) -0.010* -0.005** -0.011* -0.010* (0.006) (0.002) (0.006) (0.006) Constant 17.324*** 17.005*** 21.933*** 19.574*** 18.149*** 18.041*** 18.144*** 18.036*** (0.601) (0.644) (0.513) (2.391) (3.092) (3.608) (3.108) (3.583) OLS Mean Group Fixed Effect Random Effect 5. Conclusion Reference In recent times, India’s steel sector has Angrist, Joshua D., and Pischke , Jörn-Steffen (2009). encountered challenges due to increased imports Mostly Harmless Econometrics: An Empiricist’s and competitive pricing from major steel-producing Companion. Princeton University Press. countries. These factors have affected domestic Bellemare, M.F. and Wichman, C.J. (2020). Elasticities market share, lowered capacity utilisation, and and the Inverse Hyperbolic Sine Transformation. added pressure on domestic producers. The pricing Oxford Bulletin Economics and Statistics, 82, 50-61. strategies of exporting nations remain a concern for CRISIL (2025). Market Intelligence and Analytics the steel industry. Addressing these challenges calls report. January 12. for a balanced approach, including policy support and initiatives to enhance the competitiveness of India’s Gali, Jordi and Monacelli , Tommaso (2005). Monetary steel production through innovation, cost efficiency, Policy and Exchange Rate Volatility in a Small Open and sustainable practices. Economy, Review of Economic Studies, 72, 707–734. The findings from aggregate and panel data ICRA (2024), Steel Industry - Trends and Outlook, analyses indicate that a lower UVI for steel import December 2024. increases import intensity at the expense of domestic Olea, Jose’ L. Montiel, Stock, James H. and Watson, production. Recently, India’s key import partners Mark W. (2021). Inference in Structural Vector have reduced the UVI of steel products, driving Autoregressions Identified with an External higher import growth. This surge in imports has been Instrument. Journal of Econometrics, 225(1), 74-87. primarily fuelled by lower import prices of steel, Wooldridge, Jeffrey M (2010). Econometric Analysis which in turn has adversely impacted domestic steel of Cross Section and Panel Data. The MIT Press. production. The average import price elasticity is found to be in the range of (-) 0.73 to (-) 1.01 based on alternate model specifications. RBI Bulletin September 2025 227CURRENT 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 231 Reserve Bank of India 2 RBI – Liabilities and Assets 232 3 Liquidity Operations by RBI 233 4 Sale/ Purchase of U.S. Dollar by the RBI 234 4A Maturity Breakdown (by Residual Maturity) of Outstanding Forwards of RBI (US$ Million) 235 5 RBI's Standing Facilities 235 Money and Banking 6 Money Stock Measures 236 7 Sources of Money Stock (M) 237 3 8 Monetary Survey 238 9 Liquidity Aggregates 239 10 Reserve Bank of India Survey 240 11 Reserve Money – Components and Sources 240 12 Commercial Bank Survey 241 13 Scheduled Commercial Banks' Investments 241 14 Business in India – All Scheduled Banks and All Scheduled Commercial Banks 242 15 Deployment of Gross Bank Credit by Major Sectors 243 16 Industry-wise Deployment of Gross Bank Credit 244 17 State Co-operative Banks Maintaining Accounts with the Reserve Bank of India 245 Prices and Production 18 Consumer Price Index (Base: 2012=100) 246 19 Other Consumer Price Indices 246 20 Monthly Average Price of Gold and Silver in Mumbai 246 21 Wholesale Price Index 247 22 Index of Industrial Production (Base: 2011-12=100) 251 Government Accounts and Treasury Bills 23 Union Government Accounts at a Glance 251 24 Treasury Bills – Ownership Pattern 252 25 Auctions of Treasury Bills 252 Financial Markets 26 Daily Call Money Rates 253 27 Certificates of Deposit 254 28 Commercial Paper 254 29 Average Daily Turnover in Select Financial Markets 254 30 New Capital Issues by Non-Government Public Limited Companies 255 RBI Bulletin October 2025 229CURRENT STATISTICS No. Title Page External Sector 31 Foreign Trade 256 32 Foreign Exchange Reserves 256 33 Non-Resident Deposits 256 34 Foreign Investment Inflows 257 35 Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals 257 36 Indices of Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) of the Indian Rupee 258 37 External Commercial Borrowings (ECBs) – Registrations 259 38 India’s Overall Balance of Payments (US $ Million) 260 39 India's Overall Balance of Payments (` Crore) 260 40 Standard Presentation of BoP in India as per BPM6 (US $ Million) 262 41 Standard Presentation of BoP in India as per BPM6 (` Crore) 263 42 India’s International Investment Position 264 Payment and Settlement Systems 43 Payment System Indicators 265 Occasional Series 44 Small Savings 267 45 Ownership Pattern of Central and State Governments Securities 268 46 Combined Receipts and Disbursements of the Central and State Governments 269 47 Financial Accommodation Availed by State Governments under various Facilities 270 48 Investments by State Governments 271 49 Market Borrowings of State Governments 272 50 (a) Flow of Financial Assets and Liabilities of Households - Instrument-wise 274 50 (b) Stocks of Financial Assets and Liabilities of Households- Select Indicators 276 Notes: .. = Not available. – = Nil/Negligible. P = Preliminary/Provisional. PR = Partially Revised. 230 RBI Bulletin October 2025CURRENT STATISTICS No. 1: Select Economic Indicators 2023-24 2024-25 2025-26 Item 2024-25 Q4 Q1 Q4 Q1 1 2 3 4 5 1 Real Sector (% Change) 1.1 GVA at Basic Prices 6.4 7.3 6.5 6.8 7.6 1.1.1 Agriculture 4.6 0.9 1.5 5.4 3.7 1.1.2 Industry 4.5 9.9 7.8 4.7 5.8 1.1.3 Services 7.5 8.0 7.2 7.9 9.0 1.1a Final Consumption Expenditure 6.5 6.3 7.0 4.7 7.1 1.1b Gross Fixed Capital Formation 7.1 6.0 6.7 9.4 7.8 2024 2025 2024-25 Jul. Aug. Jul. Aug. 1 2 3 4 5 1.2 Index of Industrial Production 4.0 5.0 0.0 4.3 4.0 2 Money and Banking (% Change) 2.1 Scheduled Commercial Banks 2.1.1 Deposits 10.3 10.6 11.9 10.2 9.3 2.1.2 Credit # 11.0 13.7 13.1 10.0 10.1 2.1.2.1 Non-food Credit # 11.0 13.7 13.1 9.9 10.0 2.1.3 Investment in Govt. Securities 9.7 8.1 6.3 6.6 6.7 2.2 Money Stock Measures 2.2.1 Reserve Money (M0) 4.3 7.2 4.8 4.7 5.8 2.2.2 Broad Money (M3) 9.4 9.7 9.8 9.6 9.8 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 5.1 5.1 4.3 4.4 3.4 Credit-Deposit Ratio 80.8 79.3 78.4 79.2 79.0 3.5 Incremental Credit-Deposit Ratio # 86.1 53.1 47.7 33.5 43.3 3.6 Investment-Deposit Ratio 29.7 29.8 29.3 28.8 28.6 3.7 Incremental Investment-Deposit Ratio 28.1 28.8 20.8 3.8 7.7 4 Interest Rates (%) 4.1 Policy Repo Rate 6.25 6.50 6.50 5.50 5.50 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 5.25 5.25 4.4 Marginal Standing Facility (MSF) Rate 6.50 6.75 6.75 5.75 5.75 4.5 Bank Rate 6.50 6.75 6.75 5.75 5.75 4.6 Base Rate 9.10/10.40 9.10/10.40 9.10/10.40 8.50/10.30 8.50/10.30 4.7 MCLR (Overnight) 8.15/8.45 8.10/8.60 8.15/8.45 7.95/8.20 7.80/8.15 4.8 Term Deposit Rate >1 Year 6.00/7.25 6.00/7.30 6.00/7.25 5.85/6.70 5.85/6.60 4.9 Savings Deposit Rate 2.70/3.00 2.70/3.00 2.70/3.00 2.50/2.50 2.50/2.50 4.10 Call Money Rate (Weighted Average) 6.35 6.59 6.59 5.55 5.45 4.11 91-Day Treasury Bill (Primary) Yield 6.52 6.67 6.63 5.40 5.51 4.12 182-Day Treasury Bill (Primary) Yield 6.52 6.79 6.72 5.52 5.60 4.13 364-Day Treasury Bill (Primary) Yield 6.47 6.80 6.72 5.57 5.64 4.14 10-Year G-Sec Par Yield (FBIL) 6.62 6.97 6.90 6.41 6.67 5 Reference Rate and Forward Premia 5.1 INR-US$ Spot Rate (Rs. Per Foreign Currency) 85.58 83.73 83.87 86.52 87.85 5.2 INR-Euro Spot Rate (Rs. Per Foreign Currency) 92.32 90.86 92.91 101.73 102.47 5.3 Forward Premia of US$ 1-month (%) 3.12 1.11 1.12 1.81 1.76 3-month (%) 2.56 1.20 1.34 1.76 1.80 6-month (%) 2.28 1.43 1.64 1.85 1.97 6 Inflation (%) 6.1 All India Consumer Price Index 4.6 3.6 3.7 1.6 2.1 6.2 Consumer Price Index for Industrial Workers 3.39 2.1 2.4 2.7 3.2 6.3 Wholesale Price Index 2.3 2.1 1.2 -0.6 0.5 6.3.1 Primary Articles 5.2 3.2 2.5 -5.0 -2.1 6.3.2 Fuel and Power -1.3 1.9 -0.5 -2.4 -3.2 6.3.3 Manufactured Products 1.7 1.6 1.0 2.0 2.5 7 Foreign Trade (% Change) 7.1 Imports 6.2 11.2 10.0 8.6 -10.1 7.2 Exports 0.1 0.6 -14.1 7.3 6.7 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). Data include the impact of merger of a non-bank with a bank w.e.f. July 1, 2023. *: As per Press Release No. 2022-2023/41 dated April 08, 2022. RBI Bulletin October 2025 231CURRENT STATISTICS Reserve Bank of India No. 2: RBI - Liabilities and Assets * (₹ Crore) Item As on the Last Friday/ Friday 2024-25 2024 2025 Sep. Aug. 29 Sep. 05 Sep. 12 Sep. 19 Sep. 26 1 2 3 4 5 6 7 1 Issue Department 1.1 Liabilities 1.1.1 Notes in Circulation 3683836 3447381 3763879 3776964 3777204 3761714 3759636 1.1.2 Notes held in Banking Department 11 22 13 12 15 16 16 1.1/1.2 Total Liabilities (Total Notes Issued) or Assets 3683847 3447403 3763892 3776976 3777219 3761730 3759652 1.2 Assets 1.2.1 Gold 235379 199209 271256 282361 289078 289600 298778 1.2.2 Foreign Securities 3448129 3247889 3492206 3494274 3487902 3471979 3460443 1.2.3 Rupee Coin 340 305 429 341 239 151 431 1.2.4 Government of India Rupee Securities - - - - - - - 2 Banking Department 2.1 Liabilities 2.1.1 Deposits 1709285 1851979 1737992 1771756 1744672 1834382 1819019 2.1.1.1 Central Government 100 100 101 101 100 101 101 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 1020447 959655 926601 909536 884937 897509 2.1.1.5 Scheduled State Co-operative Banks 7776 8254 8031 8174 7506 7605 7602 2.1.1.6 Non-Scheduled State Co-operative Banks 5963 5134 5120 5335 4933 4804 4841 2.1.1.7 Other Banks 46963 49498 48027 48326 44987 45370 45316 2.1.1.8 Others 593085 600409 583536 622828 623263 726960 698795 2.1.1.9 Financial Institution Outside India 112296 168095 133480 160350 154303 164562 164813 2.1.2 Other Liabilities 2150508 2008888 2399650 2449109 2495021 2482467 2514283 2.1/2.2 Total Liabilities or Assets 3859793 3860867 4137642 4220865 4239693 4316849 4333302 2.2 Assets 2.2.1 Notes and Coins 11 22 13 12 15 16 16 2.2.2 Balances Held Abroad 1413591 1944750 1691216 1694477 1724854 1722384 1731117 2.2.3 Loans and Advances 2.2.3.1 Central Government - - - - - - - 2.2.3.2 State Governments 26284 24412 19623 44070 29150 32445 32622 2.2.3.3 Scheduled Commercial Banks 251984 33302 1950 3936 1184 57401 84836 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 8496 10975 7779 7778 13606 16985 2.2.3.9 Financial Institution Outside India 111768 167968 132802 159658 153376 163682 163895 2.2.4 Bills Purchased and Discounted 2.2.4.1 Internal - - - - - - - 2.2.4.2 Government Treasury Bills - - - - - - - 2.2.5 Investments 1560630 1316708 1767243 1773195 1772982 1774902 1733646 2.2.6 Other Assets 459101 365211 513821 537738 550353 552412 570186 2.2.6.1 Gold 429510 351532 494347 514585 526825 527777 544157 * Data are provisional. 232 RBI Bulletin October 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 Aug. 1, 2025 - - - 171795 1100 204806 - - - -375501 Aug. 2, 2025 - - - - 284 232922 - - - -232638 Aug. 3, 2025 - - - - 46 204672 - - - -204626 Aug. 4, 2025 - - - - 1232 239701 - - - -238469 Aug. 5, 2025 - - - - 1087 236724 - - - -235637 Aug. 6, 2025 - - - 67755 1697 163097 - - - -229155 Aug. 7, 2025 - - - 49055 11066 86154 -1538 - - -125681 Aug. 8, 2025 - - - 159089 4352 168392 1579 - - -321550 Aug. 9, 2025 - - - - 396 84124 - - - -83728 Aug. 10, 2025 - - - - 359 86805 - - - -86446 Aug. 11, 2025 - - - 44790 1071 97719 - - - -141438 Aug. 12, 2025 - - - - 1271 83758 - - - -82487 Aug. 13, 2025 - - - - 1814 111927 345 - - -109768 Aug. 14, 2025 - - - 182790 1127 132763 400 - - -314026 Aug. 15, 2025 - - - - 134 119519 - - - -119385 Aug. 16, 2025 - - - - 214 133135 - - - -132921 Aug. 17, 2025 - - - - 239 120519 - - - -120280 Aug. 18, 2025 - - - 23360 1273 111903 -361 - - -134351 Aug. 19, 2025 - - - - 1992 105186 - - - -103194 Aug. 20, 2025 - - - - 4249 74157 - - - -69908 Aug. 21, 2025 - - 31025 - 7687 83484 -632 - - -45404 Aug. 22, 2025 - - - 75781 1818 155889 892 - - -228960 Aug. 23, 2025 - - - - 322 90563 - - - -90241 Aug. 24, 2025 - - - - 533 92624 - - - -92091 Aug. 25, 2025 - - - - 1837 116270 -299 - - -114732 Aug. 26, 2025 - - - - 1590 127715 268 - - -125857 Aug. 27, 2025 - - - - 1292 115946 - - - -114654 Aug. 28, 2025 - - - 49515 3579 126448 - - - -172384 Aug. 29, 2025 - - - 138366 1950 117618 - - - -254034 Aug. 30, 2025 - - - - 953 138905 - - - -137952 Aug. 31, 2025 - - - - 780 129849 - - - -129069 RBI Bulletin October 2025 233CURRENT STATISTICS No. 4: Sale/ Purchase of U.S. Dollar by the RBI i) Operations in onshore / offshore OTC segment Item 2024 2025 2024-25 Aug. Jul. Aug. 1 2 3 4 1 Net Purchase/ Sale of Foreign Currency (US $ Million) (1.1-1.2) -34511 -6494 -2540 -7695 1.1 Purchase (+) 364200 16141 0 0 1.2 Sale (–) 398711 22635 2540 7695 2 ₹ equivalent at contract rate (₹ Crores) -291233 -54476 -22267 -67456 3 Cumulative (over end-March) (US $ Million) -34511 -1092 -6097 -13792 (₹ Crore) -291233 -9604 -54148 -121604 4 Outstanding Net Forward Sales (-)/ Purchase (+) at the end of month (US -84345 -18980 -57850 -53355 $ Million) ii) Operations in currency futures segment Item 2024 2025 2024-25 Aug. Jul. Aug. 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 1993 0 0 1.2 Sale (–) 31415 1993 0 0 2 Outstanding Net Currency Futures Sales (-)/ Purchase (+) at the end of 0 -897 0 -450 month (US $ Million) 234 RBI Bulletin October 2025CURRENT STATISTICS No. 4 A : Maturity Breakdown (by Residual Maturity) of Outstanding Forwards of RBI (US $ Million) Item As on August 31 , 2025 Long (+) Short (-) Net (1-2) 1 2 3 1. Upto 1 month 0 5850 -5850 2. More than 1 month and upto 3 months 0 14445 -14445 3. More than 3 months and upto 1 year 0 12960 -12960 4. More than 1 year 0 20100 -20100 Total (1+2+3+4) 0 53355 -53355 No. 5: RBI’s Standing Facilities (₹ Crore) Item As on the Last Reporting Friday 2024-25 2024 2025 Sep. 20 Apr. 18 May. 30 Jun. 27 Jul. 25 Aug. 22 Sep. 19 1 2 3 4 5 6 7 8 1 MSF 9961 21731 2003 1540 1065 1906 1818 310 2 Export Credit Refinance for Scheduled Banks 2.1 Limit - - - - - - - - 2.2 Outstanding - - - - - - - - 3 Liquidity Facility for PDs 3.1 Limit 9900 9900 14900 14900 14900 14900 14900 14900 3.2 Outstanding 9517 8547 7999 8595 7010 10299 10985 10319 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 30278 10002 10135 8075 12205 12803 10629 RBI Bulletin October 2025 235CURRENT 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 Aug. 23 Jul. 25 Aug. 08 Aug. 22 1 2 3 4 5 1 Currency with the Public (1.1 + 1.2 + 1.3 – 1.4) 3630751 3404741 3707458 3727559 3715737 1.1 Notes in Circulation 3687816 3478635 3763742 3779110 3773434 1.2 Circulation of Rupee Coin 35889 33563 37314 37314 37314 1.3 Circulation of Small Coins 743 743 743 743 743 1.4 Cash on Hand with Banks 93696 108200 94341 89608 95755 2 Deposit Money of the Public 2953329 2680305 3126308 3099834 3142161 2.1 Demand Deposits with Banks 2840023 2588482 3018666 2990112 3032516 2.2 'Other' Deposits with Reserve Bank 113307 91822 107642 109722 109645 3 M1 (1 + 2) 6584081 6085046 6833766 6827393 6857897 4 Post Office Saving Bank Deposits 212331 199827 212331 212331 212331 5 M2 (3 + 4) 6796412 6284873 7046097 7039724 7070228 6 Time Deposits with Banks 20702508 19698002 21306108 21461319 21450604 7 M3 (3 + 6) 27286589 25783048 28139873 28288712 28308502 8 Total Post Office Deposits 1443555 1370491 1443555 1443555 1443555 9 M4 (7 + 8) 28730144 27153539 29583428 29732267 29752057 236 RBI Bulletin October 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 Aug. 23 Jul. 25 Aug. 08 Aug. 22 1 2 3 4 5 1 Net Bank Credit to Government 8510825 7694769 8541317 8681282 8585943 1.1 RBI’s net credit to Government (1.1.1–1.1.2) 1508105 1025545 1502150 1615236 1511706 1.1.1 Claims on Government 1591591 1343455 1810116 1822625 1795840 1.1.1.1 Central Government 1558903 1316653 1786091 1779833 1768377 1.1.1.2 State Governments 32688 26802 24026 42792 27463 1.1.2 Government deposits with RBI 83485 317910 307966 207388 284134 1.1.2.1 Central Government 83443 317868 307924 207346 284091 1.1.2.2 State Governments 42 42 43 42 43 1.2 Other Banks’ Credit to Government 7002720 6669224 7039167 7066046 7074237 2 Bank Credit to Commercial Sector 19068129 17709792 19300981 19407618 19449509 2.1 RBI’s credit to commercial sector 38246 10307 12383 12425 13069 2.2 Other banks’ credit to commercial sector 19029883 17699485 19288597 19395194 19436439 2.2.1 Bank credit by commercial banks 18243972 16945309 18501377 18606167 18646842 2.2.2 Bank credit by co-operative banks 766659 735395 767165 768946 769722 2.2.3 Investments by commercial and co-operative banks in other securities 19252 18781 20056 20081 19876 3 Net Foreign Exchange Assets of Banking Sector (3.1 + 3.2) 6148527 5930301 6467260 6503298 6468572 3.1 RBIs net foreign exchange assets (3.1.1 - 3.1.2) 5550947 5563594 5869680 5905718 5870992 3.1.1 Gross foreign assets 5550956 5563586 5869677 5905712 5870987 3.1.2 Foreign liabilities 9 -8 -3 -6 -5 3.2 Other banks’ net foreign exchange assets 597580 366707 597580 597580 597580 4 Government’s Currency Liabilities to the Public 36632 34306 38057 38057 38057 5 Banking Sector’s Net Non-monetary Liabilities 6477524 5586120 6207741 6341544 6233580 5.1 Net non-monetary liabilities of RBI 2147427 1893229 2235868 2333098 2288911 5.2 Net non-monetary liabilities of other banks (residual) 4330098 3692891 3971873 4008446 3944669 M₃(1+2+3+4–5) 27286589 25783048 28139873 28288712 28308502 RBI Bulletin October 2025 237CURRENT STATISTICS No. 8: Monetary Survey (₹ Crore) Item Outstanding as on March 31/last reporting Fridays of the month/reporting Fridays 2024-25 2024 2025 Aug. 23 Jul. 25 Aug. 08 Aug. 22 1 2 3 4 5 Monetary Aggregates NM₁ (1.1+1.2.1+1.3) 6584081 6085046 6833766 6827393 6857897 NM₂ (NM₁ + 1.2.2.1) 15768688 14834346 16288486 16349581 16376038 NM₃ (NM₂ +1.2.2.2 + 1.4 = 2.1 + 2.2 + 2.3 – 2.4 – 2.5) 27909568 26439312 28681808 28827653 28871731 1 Components 1.1 Currency with the Public 3630751 3404741 3707458 3727559 3715737 1.2 Aggregate Deposits of Residents 23250261 22031372 24029154 24150530 24183940 1.2.1 Demand Deposits 2840023 2588482 3018666 2990112 3032516 1.2.2 Time Deposits of Residents 20410239 19442890 21010489 21160418 21151424 1.2.2.1 Short-term Time Deposits 9184607 8749300 9454720 9522188 9518141 1.2.2.1.1 Certificates of Deposits (CDs) 527375 441388 507798 509055 494788 1.2.2.2 Long-term Time Deposits 11225631 10693589 11555769 11638230 11633283 1.3 'Other' Deposits with RBI 113307 91822 107642 109722 109645 1.4 Call/Term Funding from Financial Institutions 915248 911377 837554 839842 862409 2 Sources 2.1 Domestic Credit 28802443 26570742 29125727 29376179 29305221 2.1.1 Net Bank Credit to the Government 8510825 7694769 8541317 8681282 8585943 2.1.1.1 Net RBI credit to the Government 1508105 1025545 1502150 1615236 1511706 2.1.1.2 Credit to the Government by the Banking System 7002720 6669224 7039167 7066046 7074237 2.1.2 Bank Credit to the Commercial Sector 20291618 18875973 20584410 20694897 20719277 2.1.2.1 RBI Credit to the Commercial Sector 38246 10307 12383 12425 13069 2.1.2.2 Credit to the Commercial Sector by the Banking System 20253372 18865667 20572027 20682472 20706208 2.1.2.2.1 Other Investments ( Non-SLR Securities) 1208294 1150445 1243910 1271404 1253713 2.2 Government's Currency Liabilities to the Public 36632 34306 38057 38057 38057 2.3 Net Foreign Exchange Assets of the Banking Sector 5605462 5420274 5943463 6030195 5986001 2.3.1 Net Foreign Exchange Assets of the RBI 5550947 5563594 5869680 5905718 5870992 2.3.2 Net Foreign Currency Assets of the Banking System 54514 -143320 73784 124477 115008 2.4 Capital Account 4481192 4421744 5127183 5155270 5156447 2.5 Other items (net) 2053777 1164266 1298257 1461509 1301101 238 RBI Bulletin October 2025CURRENT STATISTICS No. 9: Liquidity Aggregates (₹ Crore) Aggregates 2024-25 2024 2025 Aug. Jun. Jul. Aug. 1 2 3 4 5 1 NM₃ 27896780 26439312 28786422 28681808 28871731 2 Postal Deposits 756786 724264 756786 756786 756786 3 L₁ ( 1 + 2) 28653566 27163576 29543208 29438594 29628517 4 Liabilities of Financial Institutions 95148 68118 113786 113786 116169 4.1 Term Money Borrowings 10 395 5 5 5 4.2 Certificates of Deposit 80810 54670 98755 98755 100855 4.3 Term Deposits 14328 13054 15026 15027 15310 5 L₂ (3 + 4) 28748714 27231695 29656993 29552381 29744686 6 Public Deposits with Non-Banking Financial Companies 121178 .. 129567 .. .. 7 L₃ (5 + 6) 28869892 .. 29786560 .. .. Note : F igures in the columns might not add up to the total due to rounding off of numbers. RBI Bulletin October 2025 239CURRENT 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 Aug. 23 Jul. 25 Aug. 8 Aug. 22 1 2 3 4 5 1 Components 1.1 Currency in Circulation 3724448 3512941 3801799 3817167 3811491 1.2 Bankers’ Deposits with the RBI 991488 1023595 978898 988320 993927 1.2.1 Scheduled Commercial Banks 926001 960220 918229 926802 932900 1.3 ‘Other’ Deposits with the RBI 113307 91822 107642 109722 109645 Reserve Money (1.1 + 1.2 + 1.3 = 2.1 + 2.2 + 2.3 – 2.4 – 2.5) 4829243 4628359 4888339 4915209 4915063 2 Sources 2.1 RBI’s Domestic Credit 1389090 923688 1216470 1304532 1294924 2.1.1 Net RBI credit to the Government 1508105 1025545 1502150 1615236 1511706 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 998785 1478167 1572487 1484286 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 1316259 1785639 1779572 1767876 2.1.1.1.3.1 Central Government Securities 1558574 1316259 1785639 1779572 1767876 2.1.1.1.4 Rupee Coins 329 393 451 261 501 2.1.1.1.5 Deposits of the Central Government 83443 317868 307924 207346 284091 2.1.1.2 Net RBI credit to State Governments 32646 26760 23983 42749 27420 2.1.2 RBI’s Claims on Banks -157261 -112164 -298063 -323129 -229852 2.1.2.1 Loans and Advances to Scheduled Commercial Banks -157261 -112164 -298063 -323129 -229852 2.1.3 RBI’s Credit to Commercial Sector 38246 10307 12383 12425 13069 2.1.3.1 Loans and Advances to Primary Dealers 9182 8541 10299 10340 10985 2.1.3.2 Loans and Advances to NABARD - - - - - 2.2 Government’s Currency Liabilities to the Public 36632 34306 38057 38057 38057 2.3 Net Foreign Exchange Assets of the RBI 5550947 5563594 5869680 5905718 5870992 2.3.1 Gold 668162 511818 741528 755391 744074 2.3.2 Foreign Currency Assets 4882794 5051768 5128149 5150321 5126913 2.4 Capital Account 1875114 1863913 2179408 2243012 2204951 2.5 Other Items (net) 272313 29316 56460 90087 83960 No. 11: Reserve Money - Components and Sources (₹ Crore) Item Outstanding as on March 31/last Fridays of the month/Fridays 2024-25 2024 2025 Aug. 30 Aug. 1 Aug. 8 Aug. 15 Aug. 22 Aug. 29 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 4668483 4963561 4915209 4951207 4915063 4940913 1 Components 1.1 Currency in Circulation 3724448 3493088 3791927 3817167 3826234 3811491 3802317 1.2 Bankers' Deposits with RBI 991488 1082361 1062588 988320 1015400 993927 1020834 1.3 ‘Other’ Deposits with RBI 113307 93034 109046 109722 109574 109645 117762 2 Sources 2.1 Net Reserve Bank Credit to Government 1508105 1085576 1672489 1615236 1642610 1511706 1580652 2.2 Reserve Bank Credit to Banks -157261 -130881 -375453 -323129 -318970 -229852 -254030 2.3 Reserve Bank Credit to Commercial Sector 38246 10604 12336 12425 13170 13069 13034 2.4 Net Foreign Exchange Assets of RBI 5550947 5579313 5859517 5905718 5910984 5870992 5948355 2.5 Government's Currency Liabilities to the Public 36632 34594 38057 38057 38057 38057 38438 2.6 Net Non- Monetary Liabilities of RBI 2147427 1910724 2243385 2333098 2334644 2288911 2385536 240 RBI Bulletin October 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 Aug. 23 Jul. 25 Aug. 8 Aug. 22 1 2 3 4 5 1 Components 1.1 Aggregate Deposits of Residents 22288331 21070014 23054208 23171236 23205355 1.1.1 Demand Deposits 2698049 2446039 2876368 2846730 2889395 1.1.2 Time Deposits of Residents 19590283 18623975 20177840 20324506 20315960 1.1.2.1 Short-term Time Deposits 8788876 8345262 9057108 9123108 9119262 1.1.2.1.1 Certificates of Deposits (CDs) 527375 441388 507798 509055 494788 1.1.2.2 Long-term Time Deposits 10741960 10199765 11069799 11150465 11145765 1.2 Call/Term Funding from Financial Institutions 915248 911377 837554 839842 862409 2 Sources 2.1 Domestic Credit 26156690 24468278 26502935 26634914 26664877 2.1.1 Credit to the Government 6697298 6365128 6726284 6749709 6756507 2.1.2 Credit to the Commercial Sector 19459392 18103150 19776651 19885205 19908370 2.1.2.1 Bank Credit 18243972 16945309 18501377 18606167 18646842 2.1.2.1.1 Non-food Credit 18207441 16920948 18444703 18553885 18596386 2.1.2.2 Net Credit to Primary Dealers 15458 16000 39782 16137 16319 2.1.2.3 Investments in Other Approved Securities 630 358 544 459 459 2.1.2.4 Other Investments (in non-SLR Securities) 1199332 1141482 1234948 1262442 1244750 2.2 Net Foreign Currency Assets of Commercial Banks (2.2.1-2.2.2-2.2.3) 54514 -143320 73784 124477 115008 2.2.1 Foreign Currency Assets 529621 283039 526520 575258 554451 2.2.2 Non-resident Foreign Currency Repatriable Fixed Deposits 292270 255112 295619 300901 299180 2.2.3 Overseas Foreign Currency Borrowings 182837 171247 157117 149880 140262 2.3 Net Bank Reserves (2.3.1+2.3.2-2.3.3) 791777 1168575 1298767 1327587 1246606 2.3.1 Balances with the RBI 882415 960220 918229 926802 932900 2.3.2 Cash in Hand 81874 96191 82475 77656 83854 2.3.3 Loans and Advances from the RBI 172512 -112164 -298063 -323129 -229852 2.4 Capital Account 2581908 2533660 2923604 2888088 2927326 2.5 Other items (net) (2.1+2.2+2.3-2.4-1.1-1.2) 807812 507195 685360 813051 656642 2.5.1 Other Demand and Time Liabilities (net of 2.2.3) 878795 759393 832554 875748 893063 2.5.2 Net Inter-Bank Liabilities (other than to PDs) 118268 122730 140516 109423 115916 No. 13: Scheduled Commercial Banks’ Investments (₹ Crore) Item As on 2024 2025 March 21, 2025 Aug. 23 Jul. 25 Aug. 08 Aug. 22 1 2 3 4 5 1 SLR Securities 6697928 6365487 6726828 6750168 6756966 2 Other Government Securities (Non-SLR) 165500 158539 160321 162020 161651 3 Commercial Paper 63163 66632 63538 72909 73804 4 Shares issued by 4.1 PSUs 13874 12953 14816 14841 14987 4.2 Private Corporate Sector 95984 95920 97826 101521 98923 4.3 Others 7664 7347 7715 7691 7717 5 Bonds/Debentures issued by 5.1 PSUs 130308 120612 131793 134985 133322 5.2 Private Corporate Sector 248138 244395 245764 250165 244270 5.3 Others 150000 144139 157888 167941 162251 6 Instruments issued by 6.1 Mutual funds 119867 109634 138865 141408 140297 6.2 Financial institutions 204865 181702 216055 208961 207528 Note: 1. Data against column Nos. (1), (2) & (3) are Final and for column Nos. (4) & (5) data are Provisional. 2. Data include the impact of merger of a non bank with a bank w.e.f. July 1, 2023. RBI Bulletin October 2025 241CURRENT 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 Aug. Jul. Aug. Aug. Jul. Aug. 1 2 3 4 5 6 7 8 Number of Reporting Banks 208 208 195 195 135 135 121 121 1 Liabilities to the Banking System 458011 541312 476008 448306 451305 536780 469955 440120 1.1 Demand and Time Deposits from Banks 315675 334046 347964 329183 309414 330012 342422 321524 1.2 Borrowings from Banks 112027 128765 105216 92202 111976 128550 105206 92173 1.3 Other Demand and Time Liabilities 30310 78501 22828 26921 29916 78218 22327 26423 2 Liabilities to Others 25053097 24097455 25688230 26115123 24557481 23629065 25177053 25599553 2.1 Aggregate Deposits 23055487 22139250 23843715 24202235 22580601 21688112 23349827 23707673 2.1.1 Demand 2748263 2715452 2925734 3051908 2698049 2666996 2876368 3001393 2.1.2 Time 20307224 19423797 20917980 21150327 19882552 19021116 20473459 20706280 2.2 Borrowings 920568 920015 841980 819580 915248 915858 837554 815149 2.3 Other Demand and Time Liabilities 1077042 1038191 1002536 1093308 1061632 1025094 989672 1076731 3 Borrowings from Reserve Bank 311466 6968 1906 1950 311466 6968 1906 1950 3.1 Against Usance Bills /Promissory Notes - - - - - - - - 3.2 Others 311466 6968 1906 1950 311466 6968 1906 1950 4 Cash in Hand and Balances with Reserve Bank 985044 1134910 1022191 1070393 964289 1112899 1000704 1049343 4.1 Cash in Hand 84399 95928 85044 91835 81874 93444 82475 89688 4.2 Balances with Reserve Bank 900645 1038982 937147 978558 882415 1019456 918229 959655 5 Assets with the Banking System 432645 479881 458151 435974 348496 414893 369221 348752 5.1 Balances with Other Banks 273720 284096 327705 307280 215801 233398 264197 245338 5.1.1 In Current Account 13239 28162 15890 10899 10619 25424 13780 8810 5.1.2 In Other Accounts 260481 255934 311815 296381 205182 207974 250417 236528 5.2 Money at Call and Short Notice 44772 23818 36664 33835 25838 13637 17911 15384 5.3 Advances to Banks 43856 42175 28849 30457 39504 41391 27214 29154 5.4 Other Assets 70296 129792 64933 64401 67353 126467 59900 58877 6 Investment 6850574 6509652 6887824 6951875 6697928 6357943 6726828 6784782 6.1 Government Securities 6842024 6501765 6878471 6942689 6697298 6357504 6726284 6784263 6.2 Other Approved Securities 8550 7887 9353 9186 630 439 544 519 7 Bank Credit 18708286 17448862 18968340 19202582 18243972 17010621 18501377 18732057 7a Food Credit 87145 74656 108648 99067 36531 24036 56674 47093 7.1 Loans, Cash-credits and Overdrafts 18370704 17133011 18627704 18857112 17909851 16697901 18163165 18388591 7.2 Inland Bills-Purchased 76523 68481 77657 79073 74963 67049 77094 78758 7.3 Inland Bills-Discounted 222320 208532 226698 231103 221059 207367 225406 229973 7.4 Foreign Bills-Purchased 15357 16582 13538 13301 15122 16397 13316 13088 7.5 Foreign Bills-Discounted 23382 22256 22743 21993 22977 21906 22395 21648 Note: Data in column Nos. (4) & (8) are Provisional Data include the impact of merger of a non-bank with a bank w.e.f. July 1, 2023. 242 RBI Bulletin October 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 Aug. 23 Jul. 25 Aug. 22 2025-26 2025 1 2 3 4 % % I. Bank Credit (II + III) 18243936 16945162 18501872 18644997 2.2 10.0 II. Food Credit 36531 24361 56674 50456 38.1 107.1 III. Non-food Credit 18207404 16920802 18445197 18594541 2.1 9.9 1. Agriculture & Allied Activities 2287061 2160634 2313845 2324719 1.6 7.6 2. Industry (Micro and Small, Medium and Large) 3935857 3756194 3947778 4002072 1.7 6.5 2.1 Micro and Small 790430 743704 883101 898780 13.7 20.9 2.2 Medium 360475 324746 363994 367293 1.9 13.1 2.3 Large 2784953 2687743 2700683 2735998 -1.8 1.8 3. Services 5161542 4643586 5113966 5137774 -0.5 10.6 3.1 Transport Operators 258409 243486 265924 266868 3.3 9.6 3.2 Computer Software 32915 27990 36579 37829 14.9 35.2 3.3 Tourism, Hotels & Restaurants 83091 80570 85458 85840 3.3 6.5 3.4 Shipping 7305 7257 8727 8923 22.1 23.0 3.5 Aviation 46026 44837 45213 45857 -0.4 2.3 3.6 Professional Services 195956 173738 194935 197147 0.6 13.5 3.7 Trade 1187030 1052621 1179121 1183548 -0.3 12.4 3.7.1. Wholesale Trade¹ 648619 553316 637065 635841 -2.0 14.9 3.7.2 Retail Trade 538410 499305 542056 547706 1.7 9.7 3.8 Commercial Real Estate 532757 494809 560514 560651 5.2 13.3 3.9 Non-Banking Financial Companies (NBFCs)² of which, 1635737 1522204 1568925 1574362 -3.8 3.4 3.9.1 Housing Finance Companies (HFCs) 323146 322093 315767 318570 -1.4 -1.1 3.9.2 Public Financial Institutions (PFIs) 228678 196565 198406 199719 -12.7 1.6 3.10 Other Services³ 1182316 996074 1168570 1176749 -0.5 18.1 4. Personal Loans 5953521 5555484 6161047 6213373 4.4 11.8 4.1 Consumer Durables 23402 24396 23114 22921 -2.1 -6.0 4.2 Housing 3010477 2833166 3081152 3108791 3.3 9.7 4.3 Advances against Fixed Deposits 141101 121817 140433 142074 0.7 16.6 4.4 Advances to Individuals against share & bonds 10080 9722 9730 9807 -2.7 0.9 4.5 Credit Card Outstanding 284366 276576 291088 288691 1.5 4.4 4.6 Education 137456 126148 141537 144539 5.2 14.6 4.7 Vehicle Loans 622794 595758 643654 647829 4.0 8.7 4.8 Loan against gold jewellery⁴ 208735 140391 294166 305814 46.5 117.8 4.9 Other Personal Loans 1515112 1427510 1536172 1542907 1.8 8.1 5. Priority Sector (Memo) (i) Agriculture & Allied Activities⁵ 2287794 2152535 2288548 2310308 1.0 7.3 (ii) Micro & Small Enterprises⁶ 2239409 2027278 2489085 2510253 12.1 23.8 (iii) Medium Enterprises⁷ 601451 529582 596343 604659 0.5 14.2 (iv) Housing 746651 749534 940427 945763 26.7 26.2 (v) Education Loans 62825 61988 68839 70067 11.5 13.0 (vi) Renewable Energy 10325 6844 12160 13235 28.2 93.4 (vii) Social Infrastructure 1316 1072 943 936 -28.9 -12.7 (viii) Export Credit 12479 11618 12875 12529 0.4 7.8 (ix) Others 49552 60587 44331 44088 -11.0 -27.2 (x) Weaker Sections including net PSLC- SF/MF 1820904 1692726 1842667 1861780 2.2 10.0 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. 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 October 2025 243CURRENT 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 Aug. 23 Jul. 25 Aug. 22 2025-26 2025 1 2 3 4 % % 2 Industries (2.1 to 2.19) 3935857 3756194 3947778 4002072 1.7 6.5 2.1 Mining & Quarrying (incl. Coal) 56756 52810 54751 56740 0.0 7.4 2.2 Food Processing 219527 199514 216389 211735 -3.5 6.1 2.2.1 Sugar 28522 20808 20158 18470 -35.2 -11.2 2.2.2 Edible Oils & Vanaspati 20927 18436 21048 20565 -1.7 11.5 2.2.3 Tea 5084 6043 4925 4994 -1.8 -17.4 2.2.4 Others 164994 154227 170258 167706 1.6 8.7 2.3 Beverage & Tobacco 35513 31077 34731 36413 2.5 17.2 2.4 Textiles 277267 255993 270465 272419 -1.7 6.4 2.4.1 Cotton Textiles 107227 94108 98267 97159 -9.4 3.2 2.4.2 Jute Textiles 4288 4130 4329 4526 5.6 9.6 2.4.3 Man-Made Textiles 49091 46081 48545 48690 -0.8 5.7 2.4.4 Other Textiles 116661 111675 119324 122044 4.6 9.3 2.5 Leather & Leather Products 12980 12615 13385 13340 2.8 5.7 2.6 Wood & Wood Products 27826 24731 28053 28071 0.9 13.5 2.7 Paper & Paper Products 52848 49051 52961 53843 1.9 9.8 2.8 Petroleum, Coal Products & Nuclear Fuels 154178 158505 157907 172075 11.6 8.6 2.9 Chemicals & Chemical Products 267814 257192 268991 274397 2.5 6.7 2.9.1 Fertiliser 32011 34119 29718 28943 -9.6 -15.2 2.9.2 Drugs & Pharmaceuticals 88738 82683 86835 89048 0.3 7.7 2.9.3 Petro Chemicals 26892 29019 30494 31166 15.9 7.4 2.9.4 Others 120172 111370 121944 125241 4.2 12.5 2.10 Rubber, Plastic & their Products 103464 91839 102513 104220 0.7 13.5 2.11 Glass & Glassware 13443 12515 12920 13098 -2.6 4.7 2.12 Cement & Cement Products 59752 60851 59668 61279 2.6 0.7 2.13 Basic Metal & Metal Product 433502 413557 440996 450518 3.9 8.9 2.13.1 Iron & Steel 300156 295207 298486 305116 1.7 3.4 2.13.2 Other Metal & Metal Product 133345 118350 142509 145402 9.0 22.9 2.14 All Engineering 240135 215640 252030 258626 7.7 19.9 2.14.1 Electronics 52862 52395 57446 60975 15.3 16.4 2.14.2 Others 187272 163244 194585 197652 5.5 21.1 2.15 Vehicles, Vehicle Parts & Transport Equipment 119057 112816 121116 121798 2.3 8.0 2.16 Gems & Jewellery 85734 86229 91482 94068 9.7 9.1 2.17 Construction 150701 141627 146725 148352 -1.6 4.7 2.18 Infrastructure 1322831 1306202 1325756 1334182 0.9 2.1 2.18.1 Power 682953 638639 704850 707502 3.6 10.8 2.18.2 Telecommunications 118940 132305 106891 110144 -7.4 -16.7 2.18.3 Roads 311219 328001 316260 316926 1.8 -3.4 2.18.4 Airports 9156 8261 8296 7693 -16.0 -6.9 2.18.5 Ports 5916 6340 5505 5450 -7.9 -14.0 2.18.6 Railways 13595 11988 11457 11521 -15.3 -3.9 2.18.7 Other Infrastructure 181052 180669 172498 174944 -3.4 -3.2 2.19 Other Industries 302530 273430 296940 296896 -1.9 8.6 Note: (1) Data since July 28, 2023 include the impact of the merger of a non-bank with a bank. 244 RBI Bulletin October 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 Jul. 26 May 02 May 16 May 30 Jun. 13 Jun. 27 Jul. 11 Jul. 25 1 2 3 4 5 6 7 8 9 Number of Reporting Banks 34 34 34 34 34 34 34 34 34 1 Aggregate Deposits (2.1.1.2+2.2.1.2) 146871.0 134816.8 147608.7 147866.9 145985.2 147828.9 147839.5 147662.0 146816.8 2 Demand and Time Liabilities 2.1 Demand Liabilities 2921 5.6 28112.2 28452.9 27298.2 26758.2 26529.6 26 248.7 2748 6.4 26588 .4 2.1.1 Deposits 2.1.1.1 Inter-Bank 9022.9 8204.5 8119.3 8033.8 7428.2 7289.6 6767.4 7387.6 7217.4 2.1.1.2 Others 14063.9 13980.0 14316.8 13861.7 11836.7 13791.0 13170.9 13463.0 13008.8 2.1.2 Borrowings from Banks 700.0 179.9 1289.0 824.2 2912.2 721.2 1543.3 964.6 760.2 2.1.3 Other Demand Liabilities 5428.9 5747.8 4727.9 4578.4 4581.2 4727.8 4767.0 5671.2 5602.1 2.2 Time Liabilities 201100.7 183917.4 199704.6 200375.1 199917.5 199176.8 199275.4 198798.4 198088.7 2.2.1 Deposits 2.2.1.1 Inter-Bank 66874.3 61265.5 64977.2 64945.2 64334.4 63644.4 63111.1 63174.8 62813.5 2.2.1.2 Others 132807.1 120836.7 133291.9 134005.2 134148.5 134037.9 134668.6 134199.0 133808.0 2.2.2 Borrowings from Banks 643.9 653.8 615.5 615.5 615.5 615.5 615.5 614.7 614.7 2.2.3 Other Time Liabilities 775.4 1161.3 820.0 809.2 819.0 878.9 880.3 809.9 852.5 3 Borrowing from Reserve Bank 699.5 499.8 499.8 499.8 499.8 499.8 729.7 944.5 4 Borrowings from a notified bank / Government 126928.5 86318.6 113687.2 112391.9 113039.0 113368.7 113728.9 114754.7 114530.1 4.1 Demand 53459.8 24467.9 48334.5 47731.0 47805.0 48429.0 48853.6 51115.0 50687.4 4.2 Time 73468.7 61850.7 65352.6 64660.9 65234.0 64939.6 64875.3 63639.7 63842.7 5 Cash in Hand and Balances with Reserve Bank 13390.9 13611.0 12935.0 15919.7 16813.3 14110.1 23560.3 12644.7 12394.2 5.1 Cash in Hand 1052.1 687.9 970.1 756.2 772.5 824.3 774.2 926.3 807.2 5.2 Balance with Reserve Bank 12338.8 12923.1 11964.9 15163.5 16040.7 13285.8 22786.0 11718.4 11587.0 6 Balances with Other Banks in Current Account 1656.3 1700.0 1306.3 1197.9 1102.6 1230.4 1132.7 1244.0 1180.3 7 Investments in Government Securities 77220.1 75409.2 78309.8 79425.0 79798.1 80061.3 80872.4 83406.4 83374.4 8 Money at Call and Short Notice 26531.1 18960.1 22926.3 53472.9 21442.9 18248.3 19854.6 23005.0 20692.8 9 Bank Credit (10.1+11) 174828.8 136993.2 173379.6 173468.6 173065.3 173173.8 171391.3 170564.4 170198.2 10 Advances 10.1 Loans, Cash-Credits and Overdrafts 174590.4 136836.3 173105.4 173203.9 172775.8 172882.6 171119.8 170281.6 169936.2 10.2 Due from Banks 12460 7.6 134692.9 116990.1 116484.5 116407.6 1 16476.4 117 780.4 11684 5.5 116943. 7 11 Bills Purchased and Discounted 238.4 156.9 274.2 264.7 289.5 291.2 271.5 282.8 261.9 RBI Bulletin October 2025 245CURRENT STATISTICS Prices and Production No. 18: Consumer Price Index (Base: 2012=100) Group/Sub group 2024-25 Rural Urban Combined Rural Urban Combined Sep.24 Aug.25 Sep.25 (P) Sep.24 Aug.25 Sep.25 (P) Sep.24 Aug.25 Sep.25 (P) 1 2 3 4 5 6 7 8 9 10 11 12 1 Food and beverages 198.6 205.3 201.1 202.1 199.9 199.2 209.5 207.8 206.8 204.8 202.8 202.0 1.1 Cereals and products 195.0 193.7 194.6 194.3 197.5 197.6 192.8 197.9 198.1 193.8 197.6 197.8 1.2 Meat and fish 222.3 231.9 225.7 220.2 222.8 223.9 229.4 233.9 236.2 223.4 226.7 228.2 1.3 Egg 192.8 197.5 194.6 190.3 193.3 195.6 195.2 197.4 200.4 192.2 194.9 197.5 1.4 Milk and products 186.3 187.0 186.6 186.6 190.8 191.0 187.6 192.4 192.9 187.0 191.4 191.7 1.5 Oils and fats 175.4 165.5 171.8 169.4 202.3 203.4 160.9 184.5 185.3 166.3 195.8 196.8 1.6 Fruits 188.3 194.2 191.0 188.1 211.8 209.8 195.1 216.0 211.0 191.4 213.8 210.4 1.7 Vegetables 222.1 269.6 238.2 251.1 203.9 197.4 306.6 249.0 240.9 269.9 219.2 212.2 1.8 Pulses and products 208.0 213.5 209.8 214.1 182.0 181.6 219.7 186.5 185.5 216.0 183.5 182.9 1.9 Sugar and confectionery 130.4 132.6 131.2 131.0 135.7 136.3 132.9 137.4 137.8 131.6 136.3 136.8 1.10 Spices 228.5 223.9 227.0 229.6 221.6 221.9 224.7 218.9 219.3 228.0 220.7 221.0 1.11 Non-alcoholic beverages 185.2 173.9 180.5 184.7 191.4 191.8 173.3 180.6 180.9 179.9 186.9 187.2 1.12 Prepared meals, snacks, sweets 199.4 209.7 204.2 198.9 206.1 206.7 209.3 217.8 218.4 203.7 211.5 212.1 2 Pan, tobacco and intoxicants 207.3 212.6 208.7 206.9 212.1 212.7 213.3 218.2 218.8 208.6 213.7 214.3 3 Clothing and footwear 197.9 186.7 193.5 197.6 201.4 201.8 186.5 191.0 191.2 193.2 197.3 197.6 3.1 Clothing 198.8 188.8 194.9 198.5 202.4 202.8 188.7 193.3 193.6 194.6 198.8 199.2 3.2 Footwear 192.7 174.7 185.2 192.4 195.7 195.6 174.7 178.5 178.1 185.0 188.6 188.3 4 Housing -- 181.5 181.5 -- -- -- 181.0 186.7 188.2 181.0 186.7 188.2 5 Fuel and light 181.2 169.7 176.9 181.1 184.4 184.2 169.9 175.0 174.3 176.9 180.8 180.4 6 Miscellaneous 189.3 180.7 185.1 188.9 198.2 199.7 180.8 188.8 189.8 185.0 193.6 194.9 6.1 Household goods and services 185.7 177.1 181.6 185.2 188.8 188.9 177.0 181.9 181.9 181.3 185.5 185.6 6.2 Health 198.4 193.2 196.4 197.9 206.0 206.7 193.0 200.7 201.0 196.0 204.0 204.5 6.3 Transport and communication 175.5 164.8 169.9 176.2 179.8 179.6 165.4 168.3 168.2 170.5 173.7 173.6 6.4 Recreation and amusement 180.1 175.5 177.5 179.8 183.1 183.4 175.5 179.2 179.0 177.4 180.9 180.9 6.5 Education 190.8 186.2 188.1 191.6 197.3 197.5 187.4 194.2 194.3 189.1 195.5 195.6 6.6 Personal care and effects 204.3 206.2 205.1 201.4 232.4 240.8 203.4 234.4 242.2 202.2 233.2 241.4 General Index (All Groups) 194.9 190.0 192.6 196.7 198.7 198.8 191.4 195.0 195.3 194.2 197.0 197.2 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 Sep. Aug. Sep. 1 2 3 4 5 6 1 Consumer Price Index for Industrial Workers 2016 2.88 142.6 143.3 147.1 - 2 Consumer Price Index for Agricultural Labourers 2019 9.69 - 136.3 136.3 136.2 3 Consumer Price Index for Rural Labourers 2019 9.78 - 136.0 136.6 136.4 Source: Labour Bureau, Ministry of Labour and Employment, Government of India. CPI-AL and RL indices for 2024 (Base Year 2019) are calculated using the published inflation rates. No. 20: Monthly Average Price of Gold and Silver in Mumbai Item 2024-25 2024 2025 Aug. Jul. Aug. 1 2 3 4 1 Standard Gold (₹ per 10 grams) 75842 70441 97581 99696 2 Silver (₹ per kilogram) 89131 82751 110958 114032 Source: India Bullion & Jewellers Association Ltd., Mumbai for Gold and Silver prices in Mumbai. 246 RBI Bulletin October 2025CURRENT STATISTICS No. 21: Wholesale Price Index (Base: 2011-12 = 100) Commodities Weight 2024-25 2024 2025 Sep. Jul. Aug.(P) Sep.(P) 1 2 3 4 5 6 1 ALL COMMODITIES 100.000 154.9 154.7 154.4 155.2 154.9 1.1 PRIMARY ARTICLES 22.618 192.5 195.5 188.5 191.0 189.0 1.1.1 FOOD ARTICLES 15.256 205.3 210.8 199.7 202.6 199.8 1.1.1.1 Food Grains (Cereals+Pulses) 3.462 210.1 212.4 204.1 205.3 204.4 1.1.1.2 Fruits & Vegetables 3.475 241.4 264.1 220.8 231.4 219.2 1.1.1.3 Milk 4.440 185.8 185.3 190.4 190.7 190.8 1.1.1.4 Eggs, Meat & Fish 2.402 173.4 172.6 171.8 173.2 174.8 1.1.1.5 Condiments & Spices 0.529 232.7 243.2 200.0 199.6 202.1 1.1.1.6 Other Food Articles 0.948 213.6 207.9 221.0 218.6 216.9 1.1.2 NON-FOOD ARTICLES 4.119 161.7 162.2 164.7 169.1 167.3 1.1.2.1 Fibres 0.839 161.4 163.8 165.4 168.0 168.1 1.1.2.2 Oil Seeds 1.115 181.5 184.6 197.8 203.5 202.1 1.1.2.3 Other non-food Articles 1.960 138.7 140.2 138.3 139.5 139.1 1.1.2.4 Floriculture 0.204 277.4 244.7 234.5 269.4 244.5 1.1.3 MINERALS 0.833 229.0 223.2 236.1 235.1 238.3 1.1.3.1 Metallic Minerals 0.648 219.2 213.8 228.5 227.3 230.8 1.1.3.2 Other Minerals 0.185 263.4 256.4 262.7 262.4 264.4 1.1.4 CRUDE PETROLEUM & NATURAL GAS 2.410 151.3 146.1 141.2 139.7 140.6 1.2 FUEL & POWER 13.152 150.0 147.2 143.7 143.6 143.4 1.2.1 COAL 2.138 135.6 135.6 136.0 136.3 136.1 1.2.1.1 Coking Coal 0.647 143.4 143.4 146.4 146.4 146.4 1.2.1.2 Non-Coking Coal 1.401 125.8 125.8 126.6 126.6 126.6 1.2.1.3 Lignite 0.090 232.4 232.0 207.7 215.0 208.5 1.2.2 MINERAL OILS 7.950 156.2 154.3 149.7 149.5 148.7 1.2.3 ELECTRICITY 3.064 144.1 136.7 133.7 133.3 134.9 1.3 MANUFACTURED PRODUCTS 64.231 142.6 141.9 144.6 144.9 145.2 1.3.1 MANUFACTURE OF FOOD PRODUCTS 9.122 172.0 171.0 177.5 178.4 178.8 1.3.1.1 Processing and Preserving of meat 0.134 155.7 152.2 158.4 158.3 157.9 1.3.1.2 Processing and Preserving of fish, Crustaceans, Molluscs and products thereof 0.204 144.9 144.9 149.9 149.3 150.0 1.3.1.3 Processing and Preserving of fruit and Vegetables 0.138 132.6 132.8 136.5 135.8 135.1 1.3.1.4 Vegetable and Animal oils and Fats 2.643 168.5 162.8 182.2 185.0 186.4 1.3.1.5 Dairy products 1.165 180.8 180.0 183.8 184.0 184.7 1.3.1.6 Grain mill products 2.010 186.9 186.6 185.7 186.6 186.3 1.3.1.7 Starches and Starch products 0.110 167.0 174.6 152.7 150.7 150.8 1.3.1.8 Bakery products 0.215 170.5 169.6 176.4 176.5 176.8 1.3.1.9 Sugar, Molasses & honey 1.163 139.1 138.2 143.0 144.1 143.9 1.3.1.10 Cocoa, Chocolate and Sugar confectionery 0.175 160.6 160.5 177.2 177.0 177.0 1.3.1.11 Macaroni, Noodles, Couscous and Similar farinaceous products 0.026 156.7 153.8 160.6 160.1 160.5 1.3.1.12 Tea & Coffee products 0.371 190.7 204.5 200.3 194.5 189.5 1.3.1.13 Processed condiments & salt 0.163 192.6 192.8 190.9 190.1 190.4 1.3.1.14 Processed ready to eat food 0.024 152.7 151.7 157.2 157.3 155.0 1.3.1.15 Health supplements 0.225 185.1 186.2 187.9 187.8 190.7 1.3.1.16 Prepared animal feeds 0.356 204.1 211.4 201.3 203.8 204.2 1.3.2 MANUFACTURE OF BEVERAGES 0.909 134.1 134.3 135.1 135.6 135.7 1.3.2.1 Wines & spirits 0.408 136.0 136.0 138.3 138.8 138.9 1.3.2.2 Malt liquors and Malt 0.225 138.7 138.6 140.1 140.7 140.4 1.3.2.3 Soft drinks; Production of mineral waters and Other bottled waters 0.275 127.5 128.3 126.3 126.7 127.2 1.3.3 MANUFACTURE OF TOBACCO PRODUCTS 0.514 177.8 177.5 179.9 179.9 181.1 1.3.3.1 Tobacco products 0.514 177.8 177.5 179.9 179.9 181.1 RBI Bulletin October 2025 247CURRENT STATISTICS No. 21: Wholesale Price Index (Contd.) (Base: 2011-12 = 100) Commodities Weight 2024-25 2024 2025 Sep. Jul. Aug.(P) Sep.(P) 1 2 3 4 5 6 1.3.4 MANUFACTURE OF TEXTILES 4.881 136.3 135.8 136.8 137.8 138.1 1.3.4.1 Preparation and Spinning of textile fibres 2.582 121.4 121.6 120.2 120.7 120.4 1.3.4.2 Weaving & Finishing of textiles 1.509 158.3 156.4 161.0 163.0 164.5 1.3.4.3 Knitted and Crocheted fabrics 0.193 124.0 123.4 125.3 127.3 126.7 1.3.4.4 Made-up textile articles, Except apparel 0.299 160.4 160.9 161.0 160.8 160.6 1.3.4.5 Cordage, Rope, Twine and Netting 0.098 142.7 141.1 155.2 158.9 161.1 1.3.4.6 Other textiles 0.201 134.9 136.1 133.1 133.0 133.8 1.3.5 MANUFACTURE OF WEARING APPAREL 0.814 153.4 153.6 155.7 155.9 156.2 1.3.5.1 Manufacture of Wearing Apparel (woven), Except fur Apparel 0.593 150.9 150.9 154.0 154.1 154.1 1.3.5.2 Knitted and Crocheted apparel 0.221 160.1 160.9 160.3 160.7 161.9 1.3.6 MANUFACTURE OF LEATHER AND RELATED PRODUCTS 0.535 125.3 125.0 128.0 127.9 127.3 1.3.6.1 Tanning and Dressing of leather; Dressing and Dyeing of fur 0.142 106.1 104.9 111.9 110.7 109.4 1.3.6.2 Luggage, HandbAgs, Saddlery and Harness 0.075 142.5 142.8 141.6 141.9 142.2 1.3.6.3 Footwear 0.318 129.7 129.7 131.9 132.3 131.7 1.3.7 MANUFACTURE OF WOOD AND PRODUCTS OF WOOD AND CORK 0.772 149.2 148.6 149.6 150.0 150.0 1.3.7.1 Saw milling and Planing of wood 0.124 141.1 142.2 141.6 142.7 142.1 1.3.7.2 Veneer sheets; Manufacture of plywood, Laminboard, Particle board and Other panels and Boards 0.493 148.6 147.1 148.6 148.7 149.0 1.3.7.3 Builder's carpentry and Joinery 0.036 215.3 216.4 215.3 215.3 215.3 1.3.7.4 Wooden containers 0.119 140.6 140.9 142.7 143.3 142.7 1.3.8 MANUFACTURE OF PAPER AND PAPER PRODUCTS 1.113 139.2 139.8 139.9 139.8 140.3 1.3.8.1 Pulp, Paper and Paperboard 0.493 144.6 144.6 144.1 143.9 144.6 1.3.8.2 Corrugated paper and Paperboard and Containers of paper and Paperboard 0.314 147.3 146.9 150.8 150.9 150.2 1.3.8.3 Other articles of paper and Paperboard 0.306 122.4 124.6 121.9 121.9 123.4 1.3.9 PRINTING AND REPRODUCTION OF RECORDED MEDIA 0.676 187.3 185.3 190.5 191.4 190.7 1.3.9.1 Printing 0.676 187.3 185.3 190.5 191.4 190.7 1.3.10 MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS 6.465 136.5 136.5 137.1 137.1 137.1 1.3.10.1 Basic chemicals 1.433 138.6 138.1 141.2 140.9 141.2 1.3.10.2 Fertilizers and Nitrogen compounds 1.485 143.1 142.7 142.9 142.9 143.0 1.3.10.3 Plastic and Synthetic rubber in primary form 1.001 133.6 134.0 134.6 135.1 134.2 1.3.10.4 Pesticides and Other agrochemical products 0.454 128.8 128.8 131.2 131.6 132.4 1.3.10.5 Paints, Varnishes and Similar coatings, Printing ink and Mastics 0.491 139.5 141.3 137.2 137.1 137.5 1.3.10.6 Soap and Detergents, Cleaning and Polishing preparations, Perfumes and Toilet preparations 0.612 139.7 138.9 142.7 142.7 142.5 1.3.10.7 Other chemical products 0.692 135.4 136.5 132.7 132.8 132.6 1.3.10.8 Man-made fibres 0.296 104.9 104.6 103.5 102.9 102.7 1.3.11 MANUFACTURE OF PHARMACEUTICALS, MEDICINAL CHEMICAL AND BOTANICAL PRODUCTS 1.993 144.3 144.1 146.0 146.0 145.8 1.3.11.1 Pharmaceuticals, Medicinal chemical and Botanical products 1.993 144.3 144.1 146.0 146.0 145.8 1.3.12 MANUFACTURE OF RUBBER AND PLASTICS PRODUCTS 2.299 129.0 128.7 129.2 129.5 129.0 1.3.12.1 Rubber Tyres and Tubes; Retreading and Rebuilding of Rubber Tyres 0.609 115.6 115.0 114.9 114.9 114.7 1.3.12.2 Other Rubber Products 0.272 112.1 113.7 114.2 113.8 113.1 1.3.12.3 Plastics products 1.418 138.1 137.4 138.2 138.7 138.1 1.3.13 MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS 3.202 131.5 130.6 133.4 133.7 133.9 1.3.13.1 Glass and Glass products 0.295 163.2 163.4 163.6 162.9 162.2 1.3.13.2 Refractory products 0.223 121.6 119.8 124.0 124.0 123.9 1.3.13.3 Clay Building Materials 0.121 124.4 123.9 129.3 133.4 134.8 1.3.13.4 Other Porcelain and Ceramic Products 0.222 124.6 124.5 125.6 125.6 125.6 1.3.13.5 Cement, Lime and Plaster 1.645 130.4 128.9 132.8 133.1 133.7 248 RBI Bulletin October 2025CURRENT STATISTICS No. 21: Wholesale Price Index (Contd.) (Base: 2011-12 = 100) Commodities Weight 2024-25 2024 2025 Sep. Jul. Aug.(P) Sep.(P) 1 2 3 4 5 6 1.3.13.6 Articles of Concrete, Cement and Plaster 0.292 139.2 138.7 139.5 140.2 140.1 1.3.13.7 Cutting, Shaping and Finishing of Stone 0.234 134.4 135.4 138.4 138.2 139.3 1.3.13.8 Other Non-Metallic Mineral Products 0.169 95.2 97.2 94.0 94.0 91.9 1.3.14 MANUFACTURE OF BASIC METALS 9.646 139.7 137.7 137.2 137.4 137.4 1.3.14.1 Inputs into steel making 1.411 133.6 130.4 129.7 129.8 131.8 1.3.14.2 Metallic Iron 0.653 141.8 138.3 128.6 128.3 127.5 1.3.14.3 Mild Steel - Semi Finished Steel 1.274 117.9 114.1 115.9 115.9 115.4 1.3.14.4 Mild Steel -Long Products 1.081 140.4 138.9 135.3 135.8 135.6 1.3.14.5 Mild Steel - Flat products 1.144 134.2 132.5 133.0 132.2 130.8 1.3.14.6 Alloy steel other than Stainless Steel- Shapes 0.067 135.4 132.9 130.2 128.8 128.3 1.3.14.7 Stainless Steel - Semi Finished 0.924 131.1 130.7 122.8 123.0 122.4 1.3.14.8 Pipes & tubes 0.205 164.7 163.3 161.3 161.3 161.8 1.3.14.9 Non-ferrous metals incl. precious metals 1.693 157.4 155.6 163.0 164.1 164.5 1.3.14.10 Castings 0.925 144.9 144.9 143.3 143.6 143.5 1.3.14.11 Forgings of steel 0.271 172.2 170.8 173.9 174.3 175.9 1.3.15 MANUFACTURE OF FABRICATED METAL PRODUCTS, EXCEPT MACHINERY AND EQUIPMENT 3.155 136.0 136.3 136.5 136.9 136.9 1.3.15.1 Structural Metal Products 1.031 130.8 131.5 131.4 132.1 131.8 1.3.15.2 Tanks, Reservoirs and Containers of Metal 0.660 149.5 150.1 149.7 149.2 149.2 1.3.15.3 Steam generators, Except Central Heating Hot Water Boilers 0.145 109.8 111.2 112.5 113.2 113.3 1.3.15.4 Forging, Pressing, Stamping and Roll-Forming of Metal; Powder Metallurgy 0.383 138.0 138.9 134.2 135.7 133.8 1.3.15.5 Cutlery, Hand Tools and General Hardware 0.208 102.0 102.0 104.8 105.5 104.8 1.3.15.6 Other Fabricated Metal Products 0.728 144.9 144.0 146.9 146.8 148.6 1.3.16 MANUFACTURE OF COMPUTER, ELECTRONIC AND OPTICAL PRODUCTS 2.009 121.5 121.7 122.4 122.1 122.1 1.3.16.1 Electronic Components 0.402 117.9 117.6 120.7 120.1 120.9 1.3.16.2 Computers and Peripheral Equipment 0.336 134.2 135.4 131.4 130.4 129.7 1.3.16.3 Communication Equipment 0.310 146.0 145.1 147.0 147.2 147.2 1.3.16.4 Consumer Electronics 0.641 101.1 101.0 100.2 100.0 99.4 1.3.16.5 Measuring, Testing, Navigating and Control equipment 0.181 119.9 120.9 126.6 126.6 126.6 1.3.16.6 Watches and Clocks 0.076 167.9 167.5 175.0 175.0 175.2 1.3.16.7 Irradiation, Electromedical and Electrotherapeutic equipment 0.055 114.4 117.7 115.4 115.4 119.4 1.3.16.8 Optical instruments and Photographic equipment 0.008 107.4 107.0 117.9 117.9 117.5 1.3.17 MANUFACTURE OF ELECTRICAL EQUIPMENT 2.930 133.7 133.4 134.5 135.0 135.5 1.3.17.1 Electric motors, Generators, Transformers and Electricity distribution and Control apparatus 1.298 132.3 131.6 132.5 133.2 133.7 1.3.17.2 Batteries and Accumulators 0.236 141.3 141.3 144.7 144.9 144.8 1.3.17.3 Fibre optic cables for data transmission or live transmission of images 0.133 118.6 121.2 115.7 115.9 116.2 1.3.17.4 Other electronic and Electric wires and Cables 0.428 154.4 153.2 158.3 159.2 160.4 1.3.17.5 Wiring devices, Electric lighting & display equipment 0.263 118.4 118.7 118.3 118.2 117.9 1.3.17.6 Domestic appliances 0.366 131.8 131.7 130.6 130.8 131.3 1.3.17.7 Other electrical equipment 0.206 123.4 123.2 126.3 125.5 126.9 1.3.18 MANUFACTURE OF MACHINERY AND EQUIPMENT 4.789 130.8 130.9 132.3 132.5 132.5 1.3.18.1 Engines and Turbines, Except aircraft, Vehicle and Two wheeler engines 0.638 132.8 133.2 136.5 137.1 137.3 1.3.18.2 Fluid power equipment 0.162 134.5 133.8 135.0 135.0 134.7 1.3.18.3 Other pumps, Compressors, Taps and Valves 0.552 118.5 118.5 120.2 120.0 120.6 1.3.18.4 Bearings, Gears, Gearing and Driving elements 0.340 128.5 127.6 130.2 129.9 130.1 1.3.18.5 Ovens, Furnaces and Furnace burners 0.008 86.6 85.8 88.2 86.6 86.6 1.3.18.6 Lifting and Handling equipment 0.285 130.0 129.5 131.0 131.2 130.7 RBI Bulletin October 2025 249CURRENT STATISTICS No. 21: Wholesale Price Index (Concld.) (Base: 2011-12 = 100) Commodities Weight 2024-25 2024 2025 Sep. Jul. Aug.(P) Sep.(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 0.437 145.3 148.5 141.9 142.4 140.9 1.3.18.9 Agricultural and Forestry machinery 0.833 145.5 145.2 146.4 146.2 145.6 1.3.18.10 Metal-forming machinery and Machine tools 0.224 123.2 122.8 127.4 127.4 127.6 1.3.18.11 Machinery for mining, Quarrying and Construction 0.371 89.8 88.8 93.1 92.9 92.9 1.3.18.12 Machinery for food, Beverage and Tobacco processing 0.228 126.1 126.1 127.1 127.0 127.0 1.3.18.13 Machinery for textile, Apparel and Leather production 0.192 141.4 142.8 141.5 144.9 146.7 1.3.18.14 Other special-purpose machinery 0.468 144.9 144.7 147.6 147.9 147.9 1.3.18.15 Renewable electricity generating equipment 0.046 69.2 68.5 69.4 69.4 69.3 1.3.19 MANUFACTURE OF MOTOR VEHICLES, TRAILERS AND SEMI-TRAILERS 4.969 129.9 129.6 130.6 130.7 130.6 1.3.19.1 Motor vehicles 2.600 130.6 130.0 131.1 131.2 131.1 1.3.19.2 Parts and Accessories for motor vehicles 2.368 129.1 129.1 130.1 130.1 130.0 1.3.20 MANUFACTURE OF OTHER TRANSPORT EQUIPMENT 1.648 145.2 144.4 151.1 151.8 152.1 1.3.20.1 Building of ships and Floating structures 0.117 180.5 177.9 190.7 190.7 190.7 1.3.20.2 Railway locomotives and Rolling stock 0.110 108.9 110.0 110.0 111.0 110.3 1.3.20.3 Motor cycles 1.302 146.0 145.2 152.1 152.9 153.4 1.3.20.4 Bicycles and Invalid carriages 0.117 134.9 133.7 138.2 138.2 137.8 1.3.20.5 Other transport equipment 0.002 163.2 163.0 165.6 165.6 165.9 1.3.21 MANUFACTURE OF FURNITURE 0.727 160.3 159.4 164.8 164.7 164.5 1.3.21.1 Furniture 0.727 160.3 159.4 164.8 164.7 164.5 1.3.22 OTHER MANUFACTURING 1.064 183.8 178.9 228.8 227.7 236.6 1.3.22.1 Jewellery and Related articles 0.996 185.4 180.1 233.1 232.0 241.5 1.3.22.2 Musical instruments 0.001 201.9 204.7 196.0 203.5 198.3 1.3.22.3 Sports goods 0.012 164.9 164.4 171.9 172.4 172.7 1.3.22.4 Games and Toys 0.005 163.1 162.7 162.7 162.6 164.8 1.3.22.5 Medical and Dental instruments and Supplies 0.049 158.6 159.7 162.1 160.9 160.9 2 FOOD INDEX 24.378 192.9 195.9 191.4 193.5 192.0 Source: Office of the Economic Adviser, Ministry of Commerce and Industry, Government of India. 250 RBI Bulletin October 2025CURRENT STATISTICS No. 22: Index of Industrial Production (Base:2011-12=100) Industry Weight 2023-24 2024-25 April-August August 2024-25 2025-26 2024 2025 1 2 3 4 5 6 7 General Index 100.00 146.7 152.6 149.9 154.1 145.8 151.7 1 Sectoral Classification 1.1 Mining 14.37 128.9 132.8 125.1 122.3 107.1 113.5 1.2 Manufacturing 77.63 144.7 150.6 147.3 153.1 146.1 151.6 1.3 Electricity 7.99 198.3 208.6 219.3 220.8 212.3 221.1 2 Use-Based Classification 2.1 Primary Goods 34.05 147.7 153.5 152.2 152.1 141.6 148.9 2.2 Capital Goods 8.22 106.6 112.6 106.6 115.2 107.4 112.1 2.3 Intermediate Goods 17.22 157.3 164.0 161.2 169.7 162.3 170.4 2.4 Infrastructure/ Construction Goods 12.34 176.3 188.2 183.3 198.8 181.5 200.8 2.5 Consumer Durables 12.84 118.6 128.0 126.6 131.4 129.8 134.4 2.6 Consumer Non-Durables 15.33 153.7 151.4 147.8 144.8 141.8 132.8 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 – August 2025-26 Percentage to Budget Item (Budget 2025-26 2024-25 Estimates Estimates) (Actuals) (Actuals) 2025-26 2024-25 1 2 3 4 5 1 Revenue Receipts 3420409 1250739 1208312 36.6 38.6 1.1 Tax Revenue (Net) 2837409 810407 873845 28.6 33.8 1.2 Non-Tax Revenue 583000 440332 334467 75.5 61.3 2 Non Debt Capital Receipt 76000 31970 8866 42.1 11.4 2.1 Recovery of Loans 29000 8553 8046 29.5 28.7 2.2 Other Receipts 47000 23417 820 49.8 1.6 3 Total Receipts (excluding borrowings) (1+2) 3496409 1282709 1217178 36.7 38.0 4 Revenue Expenditure 3944255 1449283 1351367 36.7 36.4 of which : 4.1 Interest Payments 1276338 528668 400160 41.4 34.4 5 Capital Expenditure 1121090 431579 300987 38.5 27.1 6 Total Expenditure (4+5) 5065345 1880862 1652354 37.1 34.3 7 Revenue Deficit (4-1) 523846 198544 143055 37.9 24.7 8 Fiscal Deficit (6-3) 1568936 598153 435176 38.1 27.0 9 Gross Primary Deficit (8-4.1) 292598 69485 35016 23.7 7.8 Source: Controller General of Accounts (CGA), Ministry of Finance, Government of India and Union Budget 2025-26. RBI Bulletin October 2025 251CURRENT STATISTICS No. 24: Treasury Bills – Ownership Pattern (₹ Crore) 2024-25 2024 2025 Item Aug. 30 Jul. 25 Aug. 1 Aug. 8 Aug. 15 Aug. 22 Aug. 29 1 2 3 4 5 6 7 8 1 91-day 1.1 Banks 26554 2796 15002 11941 9085 11454 10311 11578 1.2 Primary Dealers 25258 9371 17505 15107 17348 11523 12215 15291 1.3 State Governments 40315 66587 71677 61727 72088 76088 74688 73688 1.4 Others 115688 90133 98093 103652 105268 109723 111174 108331 2 182-day 2.1 Banks 44887 55481 54296 57634 58470 53554 55520 53477 2.2 Primary Dealers 62218 44716 56692 54848 50380 50747 49746 48560 2.3 State Governments 11078 16093 17460 17460 17460 17281 19281 19330 2.4 Others 104994 99903 80911 77418 80051 82599 87634 84863 3 364-day 3.1 Banks 72304 82259 74597 74646 77391 78259 76032 75805 3.2 Primary Dealers 86939 123440 74963 74862 78900 77819 78405 76472 3.3 State Governments 37389 37845 47732 47540 47306 44789 45548 46601 3.4 Others 162757 186301 157340 156392 148609 148622 149263 150423 4 14-day Intermediate 4.1 Banks 4.2 Primary Dealers 4.3 State Governments 188072 180908 184745 144358 96155 144913 170177 155211 4.4 Others 572 1073 1026 1721 457 606 871 673 Total Treasury Bills (Excluding 14 day 790381 814924 766268 753227 762354 762459 769817 764420 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 Jul. 30 10000 102 25879 16274 60 9976 16274 26250 98.67 5.3970 Aug. 6 10000 104 19120 12184 74 9977 12184 22162 98.66 5.4597 Aug. 13 10000 119 26050 5021 70 9979 5021 15000 98.65 5.4902 Aug. 20 10000 133 33337 1926 55 9974 1926 11900 98.65 5.4848 Aug. 28 10000 93 22227 2321 55 9979 2321 12300 98.65 5.5087 182-day Treasury Bills 2025-26 Jul. 30 6000 122 30192 1007 29 5993 1007 7000 97.32 5.5206 Aug. 6 6000 94 24822 1706 34 5994 1706 7700 97.31 5.5475 Aug. 13 6000 103 20021 21 39 5979 21 6000 97.30 5.5678 Aug. 20 6000 105 18865 2008 51 5992 2008 8000 97.30 5.5757 Aug. 28 6000 89 18583 1811 43 5989 1811 7800 97.28 5.6001 364-day Treasury Bills 2025-26 Jul. 30 5000 103 26370 164 35 4989 164 5153 94.74 5.5673 Aug. 6 5000 89 22935 44 15 4969 44 5013 94.73 5.5790 Aug. 13 5000 98 20723 1068 37 4980 1068 6047 94.72 5.5898 Aug. 20 5000 76 13718 2784 41 4992 2784 7777 94.71 5.5986 Aug. 28 5000 75 12673 2176 52 4989 2176 7165 94.68 5.6397 252 RBI Bulletin October 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 August 01 ,2025 4.75-5.55 5.44 August 02 ,2025 4.75-5.24 4.95 August 04 ,2025 4.75-5.45 5.37 August 05 ,2025 4.75-5.45 5.36 August 06 ,2025 4.75-5.50 5.33 August 07 ,2025 4.75-6.00 5.44 August 08 ,2025 4.75-5.70 5.55 August 11 ,2025 4.75-5.45 5.36 August 12 ,2025 4.85-5.55 5.45 August 13 ,2025 4.75-5.55 5.46 August 14 ,2025 4.85-5.68 5.46 August 16 ,2025 4.75-5.45 5.01 August 18 ,2025 4.70-5.55 5.40 August 19 ,2025 4.70-5.52 5.43 August 20 ,2025 4.75-5.55 5.47 August 21 ,2025 4.75-5.75 5.52 August 22 ,2025 4.00-5.65 5.52 August 25 ,2025 4.00-5.50 5.45 August 26 ,2025 4.75-5.50 5.44 August 28 ,2025 4.75-5.60 5.46 August 29 ,2025 4.75-5.55 5.47 August 30 ,2025 4.75-5.24 4.97 September 01 ,2025 4.75-5.55 5.42 September 02 ,2025 4.75-5.50 5.39 September 03 ,2025 4.75-5.40 5.35 September 04 ,2025 4.75-5.50 5.37 September 05 ,2025 4.90-5.60 5.07 September 06 ,2025 4.75-5.00 4.99 September 09 ,2025 4.75-5.60 5.35 September 10 ,2025 4.75-5.40 5.34 September 11 ,2025 4.75-5.40 5.35 September 12 ,2025 4.75-5.50 5.43 September 15 ,2025 4.75-5.55 5.43 Note: Includes Notice Money. RBI Bulletin October 2025 253CURRENT STATISTICS No. 27: Certificates of Deposit 2024 2025 Item Sep. 20 Aug. 8 Aug. 22 Sep. 5 Sep. 19 1 2 3 4 5 1 Amount Outstanding (₹ Crore) 474683.60 511313.00 494942.79 495293.61 501817.39 1.1 Issued during the fortnight (₹ Crore) 67552.42 27981.81 36879.16 41964.99 71730.10 2 Rate of Interest (per cent) 7.11-7.83 5.64-6.24 5.66-6.27 5.69-6.50 5.49-6.82 No. 28: Commercial Paper Item 2024 2025 Aug. 31 Jul. 15 Jul. 31 Aug. 15 Aug. 31 Sep. 15 Sep. 30 1 2 3 4 5 6 7 1 Amount Outstanding (₹ Crore) 471121.50 534009.15 547229.30 554479.70 543870.10 526704.30 488262.80 1.1 Reported during the fortnight (₹ Crore) 78270.05 79530.05 73858.50 56758.35 60807.60 99422.20 70288.00 2 Rate of Interest (per cent) 6.90-13.77 5.51-12.67 5.57-13.84 5.68-12.67 5.72-13.83 5.72-11.97 5.73-12.34 No. 29: Average Daily Turnover in Select Financial Markets (₹ Crore) Item 2024-25 2024 2025 Aug. 30 Jul. 25 Aug. 1 Aug. 8 Aug. 15 Aug. 22 Aug. 29 1 2 3 4 5 6 7 8 1 Call Money 18990 17258 29057 28874 27991 24392 29137 27549 2 Notice Money 2506 4045 380 7303 390 7032 403 9328 3 Term Money 941 958 1240 1851 1097 1271 1419 1360 4 Triparty Repo 692068 791363 682533 802721 659645 803167 706895 880736 5 Market Repo 578912 601046 610007 738403 658871 794301 664441 776484 6 Repo in Corporate Bond 5212 4270 9721 10605 12377 11835 11865 12741 7 Forex (US $ million) 131877 127583 123941 147435 125078 113818 113060 143071 8 Govt. of India Dated Securities 56065 82172 82508 96887 116361 122790 100674 113169 9 State Govt. Securities 3971 2572 7952 8303 10039 7152 8004 6971 10 Treasury Bills 10.1 91-Day 2514 3373 4981 5484 5560 5979 5889 4381 10.2 182-Day 2218 2703 3470 2867 5294 2461 3716 4324 10.3 364-Day 1854 2703 2395 3239 2189 2316 1173 2150 10.4 Cash Management Bills 0 0 0 0 0 0 0 11 Total Govt. Securities (8+9+10) 66622 93522 101306 116780 139442 140697 119456 130995 11.1 RBI 1715 648 627 691 666 1265 476 1196 254 RBI Bulletin October 2025CURRENT STATISTICS No. 30: New Capital Issues by Non-Government Public Limited Companies (Amount in ₹ Crore) 2024-25 2024-25 (Apr.-Aug.) 2025-26 (Apr.-Aug.) * Aug. 2024 Aug. 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 197 69097 191 72763 43 18815 59 21544 1.1 Public 322 190478 139 58061 134 59857 33 15469 44 18261 1.2 Rights 142 19712 58 11036 57 12907 10 3346 15 3284 2 Public Issue of 43 8149 16 3161 18 4236 4 445 1 150 Bonds/ Debentures 3 Total (1+2) 507 218339 213 72257 209 76999 47 19260 60 21694 3.1 Public 365 198627 155 61221 152 64094 37 15914 45 18411 3.2 Rights 142 19712 58 11036 57 12907 10 3346 15 3284 Note : 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 p referential allotments. Source : Securities and Exchange Board of India. * : Data is Provisional RBI Bulletin October 2025 255CURRENT STATISTICS External Sector No. 31: Foreign Trade 2024 2025 2024-25 Item Unit Aug. Mar. Apr. May Jun. Jul. Aug. 1 2 3 4 5 6 7 8 1 Exports ₹ Crore 3703412 275936 364291 327621 326309 300476 319390 306997 US $ Million 437705 32890 42048 38291 38304 34978 37089 35078 1.1 Oil ₹ Crore 535157 35277 42411 61039 46329 38292 36110 38984 US $ Million 63383 4205 4895 7134 5438 4458 4193 4454 1.2 Non-oil ₹ Crore 3168255 240658 321880 266582 279979 262184 283279 268013 US $ Million 374321 28685 37152 31157 32865 30521 32896 30624 2 Imports ₹ Crore 6089909 574772 550211 559542 518468 464633 556669 539032 US $ Million 720241 68510 63507 65397 60860 54088 64643 61591 2.1 Oil ₹ Crore 1570226 101739 164684 177153 125636 118534 134119 116092 US $ Million 185779 12127 19008 20705 14748 13799 15574 13265 2.2 Non-oil ₹ Crore 4519683 473032 385527 382389 392832 346099 422551 422940 US $ Million 534462 56383 44499 44692 46113 40289 49068 48326 3 Trade Balance ₹ Crore -2386497 -298836 -185921 -231921 -192159 -164157 -237279 -232035 US $ Million -282537 -35620 -21460 -27106 -22557 -19109 -27554 -26513 3.1 Oil ₹ Crore -1035069 -66462 -122274 -116114 -79307 -80242 -98008 -77108 US $ Million -122396 -7922 -14113 -13571 -9309 -9341 -11381 -8810 3.2 Non-oil ₹ Crore -1351428 -232374 -63647 -115807 -112853 -83915 -139271 -154927 US $ Million -160141 -27698 -7346 -13535 -13247 -9769 -16173 -17702 Note: Data in the table are provisional. Source: Directorate General of Commercial Intelligence and Statistics. No. 32: Foreign Exchange Reserves 2024 2025 Item Unit Oct. 04 Aug. 22 Aug. 29 Sep. 05 Sep. 12 Sep. 19 Sep. 26 1 2 3 4 5 6 7 1 Total Reserves ₹ Crore 5887828 6046195 6125356 6162689 6206009 6189683 6211881 US $ Million 701176 690720 694230 698268 702966 702570 700236 1.1 Foreign Currency Assets ₹ Crore 5144410 5096748 5152367 5158375 5182347 5163937 5160999 US $ Million 612643 582251 583937 584477 587014 586150 581757 1.2 Gold ₹ Crore 552160 744074 765603 796946 815903 817376 842935 US $ Million 65756 85003 86769 90299 92419 92779 95017 Volume (Metric Tonnes) 858.31 879.98 879.98 879.98 879.98 879.98 880.18 1.3 SDRs SDRs Million 13702 13709 13709 13709 13709 13709 13709 ₹ Crore 154715 164003 165665 165409 165738 166321 166683 US $ Million 18425 18736 18775 18742 18773 18879 18789 1.4 Reserve Tranche Position in IMF ₹ Crore 36543 41371 41721 41960 42022 42049 41264 US $ Million 4352 4731 4749 4751 4760 4762 4673 * 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 Jul. Jun. Jul. (P) Apr.-Jul. Apr.-Jul.(P) 1 2 3 4 5 6 1 NRI Deposits 164677 157157 168327 167862 5820 4657 1.1 FCNR(B) 32809 28572 33583 33581 2839 772 1.2 NR(E)RA 100733 99981 102750 102029 1780 2418 1.3 NRO 31135 28603 31993 32251 1201 1468 P: Provisional. 256 RBI Bulletin October 2025CURRENT STATISTICS No. 34: Foreign Investment Inflows (US $ Million) 2024-25 2025-26 (P) 2024 (P) 2025 (P) Item 2024-25 Apr.-Aug. Apr.-Aug. Aug. Jul. Aug. 1 2 3 4 5 6 1.1 Net Foreign Direct Investment (1.1.1-1.1.2) 959 4578 10128 1042 5039 -616 1.1.1 Direct Investment to India (1.1.1.1-1.1.1.2) 29130 14448 22555 3511 7304 1121 1.1.1.1 Gross Inflows/Gross Investments 80615 37034 43760 8718 11105 6049 1.1.1.1.1 Equity 50993 26163 31990 6470 8760 3812 1.1.1.1.1.1 Government (SIA/FIPB) 2208 377 1513 56 11 141 1.1.1.1.1.2 RBI 34686 18136 22689 4273 6366 2795 1.1.1.1.1.3 Acquisition of shares 13124 7271 6844 2064 2306 798 1.1.1.1.1.4 Equity capital of unincorporated bodies 975 379 945 78 78 78 1.1.1.1.2 Reinvested earnings 22759 8848 9500 1812 1812 1812 1.1.1.1.3 Other capital 6863 2023 2271 436 533 425 1.1.1.2 Repatriation/Disinvestment 51486 22586 21205 5207 3801 4928 1.1.1.2.1 Equity 49525 21684 20444 5005 3666 4701 1.1.1.2.2 Other capital 1960 902 761 202 135 227 1.1.2 Foreign Direct Investment by India 28171 9870 12427 2468 2265 1736 (1.1.2.1+1.1.2.2+1.1.2.3-1.1.2.4) 1.1.2.1 Equity capital 16945 6429 7126 1330 1452 922 1.1.2.2 Reinvested Earnings 6846 2853 3025 571 571 571 1.1.2.3 Other Capital 7955 2101 3326 751 565 355 1.1.2.4 Repatriation/Disinvestment 3575 1513 1049 183 323 112 1.2 Net Portfolio Investment (1.2.1+1.2.2+1.2.3-1.2.4) 3564 11082 -3711 4298 -2724 -2595 1.2.1 GDRs/ADRs - - - - - - 1.2.2 FIIs 3283 11012 -2517 4286 -2483 -2515 1.2.3 Offshore funds and others - - - - - - 1.2.4 Portfolio investment by India -281 -71 1193 -12 241 80 1 Foreign Investment Inflows 4523 15660 6417 5340 2315 -3211 P: Provisional No. 35: Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals (US $ Million) 2024 2025 Item 2024-25 Aug. Jun. Jul. Aug. 1 2 3 4 5 1 Outward Remittances under the LRS 29563.12 3211.54 2127.39 2452.93 2642.91 1.1 Deposit 705.26 45.56 42.12 46.24 42.75 1.2 Purchase of immovable property 322.82 22.49 37.75 39.48 36.02 1.3 Investment in equity/debt 1698.94 125.30 206.12 156.19 152.18 1.4 Gift 2938.69 244.41 190.51 223.53 190.43 1.5 Donations 11.81 0.67 1.26 0.73 0.78 1.6 Travel 16964.57 2013.30 1235.17 1445.34 1618.81 1.7 Maintenance of close relatives 3722.03 315.40 262.97 298.11 272.05 1.8 Medical Treatment 81.19 7.65 5.59 6.26 3.99 1.9 Studies Abroad 2918.91 416.39 138.76 229.25 319.17 1.10 Others 198.90 20.36 7.15 7.80 6.73 RBI Bulletin October 2025 257CURRENT 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 Sep. Aug. Sep. Item 1 2 3 4 5 40-Currency Basket (Base: 2015-16=100) 1 Trade-Weighted 1.1 NEER 90.75 91.01 90.35 85.41 84.55 1.2 REER 103.71 105.24 105.38 98.80 97.65 2 Export-Weighted 2.1 NEER 93.13 93.52 93.06 87.35 86.34 2.2 REER 101.22 102.34 102.74 96.00 94.67 6-Currency Basket (Trade-weighted) 1 Base : 2015-16 =100 1.1 NEER 83.62 82.38 81.53 77.47 76.38 1.2 REER 101.66 102.72 102.49 97.13 95.84 2 Base : 2022-23 =100 2.1 NEER 97.31 95.87 94.88 90.16 88.89 2.2 REER 99.86 100.90 100.68 95.41 94.14 Note: Data for 2024-25 and 2025-26 so far is provisional. 258 RBI Bulletin October 2025CURRENT STATISTICS No. 37: External Commercial Borrowings (ECBs) – Registrations (Amount in US $ Million) Item 2024-25 2024 2025 Aug. Jul. Aug. 1 2 3 4 1 Automatic Route 1.1 Number 1328 99 126 96 1.2 Amount 47800 5460 3220 2217 2 Approval Route 2.1 Number 51 3 1 2 2.2 Amount 13384 449 101 1050 3 Total (1+2) 3.1 Number 1379 102 127 98 3.2 Amount 61184 5909 3321 3267 4 Weighted Average Maturity (in years) 5.05 4.50 5.30 5.50 5 Interest Rate (per cent) 5.1 Weighted Average Margin over alternative reference rate (ARR) for Floating Rate Loans@ 1.48 1.49 1.61 1.41 5.2 Interest rate range for Fixed Rate Loans 0.00-11.67 0.01-10.00 0.00-10.80 0.00-10.50 Borrower Category I. Corporate Manufacturing 13900 1452 299 207 II. Corporate-Infrastructure 15462 1042 1260 698 a.) Transport 614 0 0 26 b.) Energy 6900 983 724 198 c.) Water and Sanitation 28 0 0 0 d.) Communication 13 0 0 0 e.) Social and Commercial Infrastructure 184 0 0 0 f.) Exploration,Mining and Refinery 5356 0 160 470 g.) Other Sub-Sectors 2367 59 376 4 III. Corporate Service-Sector 3226 372 379 498 IV. Other Entities 1026 0 0 0 a.) units in SEZ 26 0 0 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 3009 1372 1853 a). NBFC- IFC/AFC 12389 773 121 467 b). NBFC-MFI 459 18 15 0 c). NBFC-Others 13470 2218 1236 1386 VIII. Non-Government Organization (NGO) 0 0 0 0 IX. Micro Finance Institution (MFI) 0 0 0 0 X. Others 1252 34 11 11 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 October 2025 259CURRENT STATISTICS No. 38: India’s Overall Balance of Payments (US$ Million) Apr-Jun 2024 Apr-Jun 2025 (P) Credit Debit Net Credit Debit Net Item 1 2 3 4 5 6 Overall Balance Of Payments (1+2+3) 507129 501903 5226 545826 541318 4508 1 Current Account (1.1+ 1.2) 241832 250508 -8676 256736 259106 -2370 1.1 Merchandise 111158 174963 -63805 113087 181551 -68464 1.2 Invisibles (1.2.1+1.2.2+1.2.3) 130674 75545 55129 143649 77555 66094 1.2.1 Services 88465 48784 39681 97428 49507 47920 1.2.1.1 Travel 7352 9171 -1819 5855 9085 -3230 1.2.1.2 Transportation 8506 8609 -103 7708 8395 -687 1.2.1.3 Insurance 903 593 310 926 613 313 1.2.1.4 G.n.i.e. 161 309 -147 134 323 -188 1.2.1.5 Miscellaneous 71542 30102 41440 82805 31092 51712 1.2.1.5.1 Software Services 41926 4479 37447 47324 5853 41471 1.2.1.5.2 Business Services 23000 16625 6375 29511 15868 13643 1.2.1.5.3 Financial Services 2215 1267 948 1945 703 1242 1.2.1.5.4 Communication Services 519 444 75 503 380 123 1.2.2 Transfers 29520 3215 26304 34048 3029 31019 1.2.2.1 Official 18 312 -293 20 217 -197 1.2.2.2 Private 29502 2904 26598 34028 2812 31216 1.2.3 Income 12689 23546 -10857 12174 25019 -12845 1.2.3.1 Investment Income 10552 22568 -12016 10044 23992 -13948 1.2.3.2 Compensation of Employees 2137 978 1159 2130 1027 1103 2 Capital Account (2.1+2.2+2.3+2.4+2.5) 264502 251395 13107 289090 281389 7700 2.1 Foreign Investment (2.1.1+2.1.2) 183768 176600 7168 173561 166248 7313 2.1.1 Foreign Direct Investment 23925 17701 6224 27222 21517 5705 2.1.1.1 In India 22777 12171 10606 26607 12476 14131 2.1.1.1.1 Equity 16402 11673 4728 19418 12078 7340 2.1.1.1.2 Reinvested Earnings 5225 5225 5876 5876 2.1.1.1.3 Other Capital 1151 498 653 1313 398 914 2.1.1.2 Abroad 1147 5529 -4382 615 9041 -8426 2.1.1.2.1 Equity 1147 2728 -1580 615 4752 -4137 2.1.1.2.2 Reinvested Earnings 0 1712 -1712 0 1884 -1884 2.1.1.2.3 Other Capital 0 1090 -1090 0 2405 -2405 2.1.2 Portfolio Investment 159844 158899 945 146339 144731 1608 2.1.2.1 In India 159240 158343 897 145201 142720 2481 2.1.2.1.1 FIIs 159240 158343 897 145201 142720 2481 2.1.2.1.1.1 Equity 139824 140833 -1009 123636 118245 5391 2.1.2.1.1.2 Debt 19416 17510 1906 21565 24475 -2910 2.1.2.1.2 ADR/GDRs 0 0 0 0 0 0 2.1.2.2 Abroad 604 556 48 1138 2011 -872 2.2 Loans (2.2.1+2.2.2+2.2.3) 31815 26686 5129 65326 59337 5989 2.2.1 External Assistance 3640 2267 1373 3120 2398 722 2.2.1.1 By India 6 26 -20 6 11 -5 2.2.1.2 To India 3634 2241 1393 3114 2387 727 2.2.2 Commercial Borrowings 12627 11098 1529 46754 42206 4548 2.2.2.1 By India 4138 4255 -117 36024 35153 871 2.2.2.2 To India 8489 6843 1646 10730 7053 3677 2.2.3 Short Term to India 15548 13321 2228 15453 14734 719 2.2.3.1 Buyers' credit & Suppliers' Credit >180 days 13729 13321 408 15453 13689 1764 2.2.3.2 Suppliers' Credit up to 180 days 1820 0 1820 0 1045 -1045 2.3 Banking Capital (2.3.1+2.3.2) 36380 33511 2870 33634 35189 -1555 2.3.1 Commercial Banks 36259 33511 2749 33625 35189 -1564 2.3.1.1 Assets 10705 13570 -2865 8579 13083 -4504 2.3.1.2 Liabilities 25554 19941 5614 25046 22106 2939 2.3.1.2.1 Non-Resident Deposits 23426 19401 4025 23778 20164 3614 2.3.2 Others 121 0 121 10 0 10 2.4 Rupee Debt Service 0 61 -61 0 61 -61 2.5 Other Capital 12538 14537 -1999 16568 20554 -3986 3 Errors & Omissions 795 0 795 0 823 -823 4 Monetary Movements (4.1+ 4.2) 0 5226 -5226 0 4508 -4508 4.1 I.M.F. 0 0 0 0 0 0 4.2 Foreign Exchange Reserves (Increase - / Decrease +) 5226 -5226 4508 -4508 Note: P: Preliminary. 260 RBI Bulletin October 2025CURRENT STATISTICS No. 39: India’s Overall Balance of Payments (₹ Crore) Apr-Jun 2024 Apr-Jun 2025 (P) Credit Debit Net Credit Debit Net Item 1 2 3 4 5 6 Overall Balance Of Payments (1+2+3) 4230634 4187037 43597 4669620 4631057 38563 1 Current Account (1.1+ 1.2) 2017438 2089818 -72379 2196416 2216691 -20275 1.1 Merchandise 927317 1459598 -532281 967474 1553197 -585723 1.2 Invisibles (1.2.1+1.2.2+1.2.3) 1090122 630220 459902 1228942 663494 565447 1.2.1 Services 738001 406971 331030 833507 423543 409964 1.2.1.1 Travel 61335 76511 -15177 50087 77720 -27633 1.2.1.2 Transportation 70959 71816 -856 65943 71818 -5876 1.2.1.3 Insurance 7534 4950 2584 7924 5245 2679 1.2.1.4 G.n.i.e. 1346 2575 -1229 1148 2761 -1612 1.2.1.5 Miscellaneous 596827 251118 345709 708405 265999 442406 1.2.1.5.1 Software Services 349760 37363 312397 404862 50070 354792 1.2.1.5.2 Business Services 191873 138694 53178 252469 135754 116715 1.2.1.5.3 Financial Services 18478 10572 7906 16636 6012 10624 1.2.1.5.4 Communication Services 4331 3702 629 4305 3251 1053 1.2.2 Transfers 246264 26824 219440 291287 25911 265375 1.2.2.1 Official 153 2599 -2446 172 1858 -1686 1.2.2.2 Private 246112 24225 221887 291114 24053 267061 1.2.3 Income 105857 196425 -90569 104148 214040 -109892 1.2.3.1 Investment Income 88028 188267 -100239 85926 205255 -119329 1.2.3.2 Compensation of Employees 17829 8158 9670 18222 8785 9437 2 Capital Account (2.1+2.2+2.3+2.4+2.5) 2206565 2097219 109346 2473204 2407326 65878 2.1 Foreign Investment (2.1.1+2.1.2) 1533057 1473256 59801 1484840 1422274 62567 2.1.1 Foreign Direct Investment 199586 147666 51920 232886 184078 48808 2.1.1.1 In India 190016 101538 88478 227624 106733 120892 2.1.1.1.1 Equity 136827 97382 39445 166121 103325 62795 2.1.1.1.2 Reinvested Earnings 43588 0 43588 50274 0 50274 2.1.1.1.3 Other Capital 9600 4156 5444 11230 3407 7822 2.1.1.2 Abroad 9570 46128 -36558 5262 77345 -72084 2.1.1.2.1 Equity 9570 22755 -13184 5262 40654 -35392 2.1.1.2.2 Reinvested Earnings 0 14278 -14278 0 16116 -16116 2.1.1.2.3 Other Capital 0 9095 -9095 0 20575 -20575 2.1.2 Portfolio Investment 1333471 1325590 7881 1251954 1238196 13759 2.1.2.1 In India 1328434 1320949 7485 1242216 1220994 21223 2.1.2.1.1 FIIs 1328434 1320949 7485 1242216 1220994 21223 2.1.2.1.1.1 Equity 1166461 1174878 -8416 1057724 1011603 46121 2.1.2.1.1.2 Debt 161973 146071 15901 184493 209391 -24898 2.1.2.1.2 ADR/GDRs 0 0 0 0 0 0 2.1.2.2 Abroad 5037 4641 396 9738 17202 -7464 2.2 Loans (2.2.1+2.2.2+2.2.3) 265411 222623 42788 558876 507639 51237 2.2.1 External Assistance 30365 18913 11451 26690 20513 6177 2.2.1.1 By India 52 217 -166 52 94 -42 2.2.1.2 To India 30313 18696 11617 26638 20419 6219 2.2.2 Commercial Borrowings 105337 92583 12753 399987 361074 38913 2.2.2.1 By India 34517 35497 -980 308187 300735 7452 2.2.2.2 To India 70820 57087 13733 91800 60339 31461 2.2.3 Short Term to India 129710 111126 18583 132199 126052 6147 2.2.3.1 Buyers' credit & Suppliers' Credit >180 days 114529 111126 3402 132199 117110 15089 2.2.3.2 Suppliers' Credit up to 180 days 15181 0 15181 0 8942 -8942 2.3 Banking Capital (2.3.1+2.3.2) 303498 279556 23942 287747 301047 -13300 2.3.1 Commercial Banks 302487 279556 22931 287664 301047 -13384 2.3.1.1 Assets 89303 113205 -23902 73395 111925 -38530 2.3.1.2 Liabilities 213184 166351 46833 214268 189122 25147 2.3.1.2.1 Non-Resident Deposits 195426 161851 33575 203422 172503 30920 2.3.2 Others 1011 0 1011 84 0 84 2.4 Rupee Debt Service 0 508 -508 0 524 -524 2.5 Other Capital 104599 121277 -16677 141740 175841 -34101 3 Errors & Omissions 6630 0 6630 0 7040 -7040 4 Monetary Movements (4.1+ 4.2) 0 43597 -43597 0 38563 -38563 4.1 I.M.F. 0 0 0 0 0 0 4.2 Foreign Exchange Reserves (Increase - / Decrease +) 0 43597 -43597 0 38563 -38563 Note: P: Preliminary. RBI Bulletin October 2025 261CURRENT STATISTICS No. 40: Standard Presentation of BoP in India as per BPM6 (US$ Million) Item Apr-Jun 2024 Apr-Jun 2025 (P) Credit Debit Net Credit Debit Net 1 2 3 4 5 6 1 Current Account (1.A+1.B+1.C) 241831 250477 -8646 256736 259087 -2351 1.A Goods and Services (1.A.a+1.A.b) 199623 223747 -24124 210514 231059 -20544 1.A.a Goods (1.A.a.1 to 1.A.a.3) 111158 174963 -63805 113087 181551 -68464 1.A.a.1 General merchandise on a BOP basis 111119 166616 -55497 112707 174065 -61359 1.A.a.2 Net exports of goods under merchanting 39 0 39 380 0 380 1.A.a.3 Nonmonetary gold 8347 -8347 7486 -7486 1.A.b Services (1.A.b.1 to 1.A.b.13) 88465 48784 39681 97428 49507 47920 1.A.b.1 Manufacturing services on physical inputs owned by others 268 22 246 253 40 213 1.A.b.2 Maintenance and repair services n.i.e. 81 238 -157 76 267 -191 1.A.b.3 Transport 8506 8609 -103 7708 8395 -687 1.A.b.4 Travel 7352 9171 -1819 5855 9085 -3230 1.A.b.5 Construction 1478 563 915 1098 891 207 1.A.b.6 Insurance and pension services 903 593 310 926 613 313 1.A.b.7 Financial services 2215 1267 948 1945 703 1242 1.A.b.8 Charges for the use of intellectual property n.i.e. 341 4448 -4107 446 5352 -4906 1.A.b.9 Telecommunications, computer, and information services 42541 5215 37326 47932 6470 41462 1.A.b.10 Other business services 23000 16625 6375 29511 15868 13643 1.A.b.11 Personal, cultural, and recreational services 1175 1249 -74 1210 1157 54 1.A.b.12 Government goods and services n.i.e. 161 309 -147 134 323 -188 1.A.b.13 Others n.i.e. 444 475 -31 334 345 -11 1.B Primary Income (1.B.1 to 1.B.3) 12689 23546 -10857 12174 25019 -12845 1.B.1 Compensation of employees 2137 978 1159 2130 1027 1103 1.B.2 Investment income 8660 21944 -13284 8498 23345 -14846 1.B.2.1 Direct investment 3384 12672 -9288 3156 14533 -11377 1.B.2.2 Portfolio investment 70 2411 -2341 113 1815 -1702 1.B.2.3 Other investment 1110 6641 -5531 1001 6826 -5825 1.B.2.4 Reserve assets 4095 220 3876 4228 170 4058 1.B.3 Other primary income 1892 624 1268 1545 647 898 1.C Secondary Income (1.C.1+1.C.2) 29520 3185 26335 34048 3010 31038 1.C.1 Financial corporations, nonfinancial corporations, households, and NPISHs 29502 2904 26598 34028 2812 31216 1.C.1.1 Personal transfers (Current transfers between resident and/non-resident households) 28644 1989 26655 33162 2061 31101 1.C.1.2 Other current transfers 857 914 -57 866 750 115 1.C.2 General government 18 281 -263 20 198 -178 2 Capital Account (2.1+2.2) 185 150 35 177 577 -400 2.1 Gross acquisitions (DR.)/disposals (CR.) of non-produced nonfinancial assets 4 45 -41 23 398 -374 2.2 Capital transfers 182 105 76 154 179 -26 3 Financial Account (3.1 to 3.5) 264317 256501 7816 288913 285339 3574 3.1 Direct Investment (3.1A+3.1B) 23925 17701 6224 27222 21517 5705 3.1.A Direct Investment in India 22777 12171 10606 26607 12476 14131 3.1.A.1 Equity and investment fund shares 21627 11673 9953 25294 12078 13217 3.1.A.1.1 Equity other than reinvestment of earnings 16402 11673 4728 19418 12078 7340 3.1.A.1.2 Reinvestment of earnings 5225 5225 5876 5876 3.1.A.2 Debt instruments 1151 498 653 1313 398 914 3.1.A.2.1 Direct investor in direct investment enterprises 1151 498 653 1313 398 914 3.1.B Direct Investment by India 1147 5529 -4382 615 9041 -8426 3.1.B.1 Equity and investment fund shares 1147 4439 -3292 615 6636 -6021 3.1.B.1.1 Equity other than reinvestment of earnings 1147 2728 -1580 615 4752 -4137 3.1.B.1.2 Reinvestment of earnings 1712 -1712 1884 -1884 3.1.B.2 Debt instruments 0 1090 -1090 0 2405 -2405 3.1.B.2.1 Direct investor in direct investment enterprises 1090 -1090 2405 -2405 3.2 Portfolio Investment 159844 158899 945 146339 144731 1608 3.2.A Portfolio Investment in India 159240 158343 897 145201 142720 2481 3.2.1 Equity and investment fund shares 139824 140833 -1009 123636 118245 5391 3.2.2 Debt securities 19416 17510 1906 21565 24475 -2910 3.2.B Portfolio Investment by India 604 556 48 1138 2011 -872 3.3 Financial derivatives (other than reserves) and employee stock options 6053 9666 -3613 5501 10588 -5087 3.4 Other investment 74496 65009 9487 109851 103996 5855 3.4.1 Other equity (ADRs/GDRs) 0 0 0 0 0 0 3.4.2 Currency and deposits 23547 19401 4146 23788 20164 3624 3.4.2.1 Central bank (Rupee Debt Movements; NRG) 121 0 121 10 0 10 3.4.2.2 Deposit-taking corporations, except the central bank (NRI Deposits) 23426 19401 4025 23778 20164 3614 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) 29100 27475 1626 59721 59629 92 3.4.3.A Loans to India 24956 23193 1763 23691 24465 -774 3.4.3.B Loans by India 4144 4281 -137 36030 35163 866 3.4.4 Insurance, pension, and standardized guarantee schemes 47 133 -86 43 92 -49 3.4.5 Trade credit and advances 15548 13321 2228 15453 14734 719 3.4.6 Other accounts receivable/payable - other 6253 4680 1574 10848 9378 1470 3.4.7 Special drawing rights 0 0 3.5 Reserve assets 0 5226 -5226 0 4508 -4508 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 5226 -5226 0 4508 -4508 4 Total assets/liabilities 264317 256501 7816 288913 285339 3574 4.1 Equity and investment fund shares 169302 167301 2001 156227 149648 6579 4.2 Debt instruments 88762 79295 9467 121838 121805 33 4.3 Other financial assets and liabilities 6253 9906 -3652 10848 13886 -3038 5 Net errors and omissions 795 0 795 0 823 -823 Note: P: Preliminary. 262 RBI Bulletin October 2025CURRENT STATISTICS No. 41: Standard Presentation of BoP in India as per BPM6 (₹ Crore) Apr-Jun 2024 Apr-Jun 2025 (P) Item Credit Debit Net Credit Debit Net 1 2 3 4 5 6 1 Current Account (1.A+1.B+1.C) 2017436 2089564 -72128 2196412 2216528 -20117 1.A Goods and Services (1.A.a+1.A.b) 1665317 1866568 -201251 1800981 1976740 -175759 1.A.a Goods (1.A.a.1 to 1.A.a.3) 927317 1459598 -532281 967474 1553197 -585723 1.A.a.1 General merchandise on a BOP basis 926993 1389964 -462971 964221 1489154 -524933 1.A.a.2 Net exports of goods under merchanting 324 0 324 3253 0 3253 1.A.a.3 Nonmonetary gold 0 69634 -69634 0 64043 -64043 1.A.b Services (1.A.b.1 to 1.A.b.13) 738001 406970 331030 833507 423543 409964 1.A.b.1 Manufacturing services on physical inputs owned by others 2234 183 2051 2162 341 1821 1.A.b.2 Maintenance and repair services n.i.e. 676 1983 -1307 654 2286 -1632 1.A.b.3 Transport 70959 71816 -856 65943 71818 -5876 1.A.b.4 Travel 61335 76511 -15177 50087 77720 -27633 1.A.b.5 Construction 12327 4693 7635 9390 7619 1771 1.A.b.6 Insurance and pension services 7534 4950 2584 7924 5245 2679 1.A.b.7 Financial services 18478 10572 7906 16636 6012 10624 1.A.b.8 Charges for the use of intellectual property n.i.e. 2843 37103 -34261 3818 45787 -41969 1.A.b.9 Telecommunications, computer, and information services 354891 43507 311384 410065 55353 354712 1.A.b.10 Other business services 191873 138694 53178 252469 135754 116715 1.A.b.11 Personal, cultural, and recreational services 9803 10418 -615 10353 9894 459 1.A.b.12 Government goods and services n.i.e. 1346 2575 -1229 1148 2761 -1612 1.A.b.13 Others n.i.e. 3703 3965 -262 2858 2953 -95 1.B Primary Income (1.B.1 to 1.B.3) 105857 196425 -90569 104148 214040 -109892 1.B.1 Compensation of employees 17829 8158 9670 18222 8785 9437 1.B.2 Investment income 72241 183061 -110820 72705 199717 -127012 1.B.2.1 Direct investment 28232 105711 -77480 27000 124332 -97331 1.B.2.2 Portfolio investment 582 20112 -19530 969 15529 -14560 1.B.2.3 Other investment 9262 55405 -46143 8563 58401 -49838 1.B.2.4 Reserve assets 34166 1833 32333 36172 1455 34717 1.B.3 Other primary income 15787 5206 10581 13221 5537 7683 1.C Secondary Income (1.C.1+1.C.2) 246262 26570 219692 291283 25749 265534 1.C.1 Financial corporations, nonfinancial corporations, households, and NPISHs 246112 24225 221887 291114 24053 267061 1.C.1.1 Personal transfers (Current transfers between resident and/non-resident households) 238960 16597 222364 283709 17634 266075 1.C.1.2 Other current transfers 7151 7628 -477 7405 6419 986 1.C.2 General government 150 2345 -2195 168 1695 -1527 2 Capital Account (2.1+2.2) 1547 1253 295 1515 4936 -3421 2.1 Gross acquisitions (DR.)/disposals (CR.) of non-produced nonfinancial assets 32 375 -343 199 3401 -3202 2.2 Capital transfers 1515 878 637 1316 1535 -219 3 Financial Account (3.1 to 3.5) 2205020 2139817 65203 2471694 2441116 30578 3.1 Direct Investment (3.1A+3.1B) 199586 147666 51920 232886 184078 48808 3.1.A Direct Investment in India 190016 101538 88478 227624 106733 120892 3.1.A.1 Equity and investment fund shares 180416 97382 83034 216395 103325 113069 3.1.A.1.1 Equity other than reinvestment of earnings 136827 97382 39445 166121 103325 62795 3.1.A.1.2 Reinvestment of earnings 43588 0 43588 50274 0 50274 3.1.A.2 Debt instruments 9600 4156 5444 11230 3407 7822 3.1.A.2.1 Direct investor in direct investment enterprises 9600 4156 5444 11230 3407 7822 3.1.B Direct Investment by India 9570 46128 -36558 5262 77345 -72084 3.1.B.1 Equity and investment fund shares 9570 37033 -27463 5262 56770 -51509 3.1.B.1.1 Equity other than reinvestment of earnings 9570 22755 -13184 5262 40654 -35392 3.1.B.1.2 Reinvestment of earnings 0 14278 -14278 0 16116 -16116 3.1.B.2 Debt instruments 0 9095 -9095 0 20575 -20575 3.1.B.2.1 Direct investor in direct investment enterprises 0 9095 -9095 0 20575 -20575 3.2 Portfolio Investment 1333471 1325590 7881 1251954 1238196 13759 3.2.A Portfolio Investment in India 1328434 1320949 7485 1242216 1220994 21223 3.2.1 Equity and investment fund shares 1166461 1174878 -8416 1057724 1011603 46121 3.2.2 Debt securities 161973 146071 15901 184493 209391 -24898 3.2.B Portfolio Investment by India 5037 4641 396 9738 17202 -7464 3.3 Financial derivatives (other than reserves) and employee stock options 50493 80637 -30144 47060 90579 -43519 3.4 Other investment 621470 542327 79143 939793 889701 50093 3.4.1 Other equity (ADRs/GDRs) 0 0 0 0 0 0 3.4.2 Currency and deposits 196437 161851 34586 203506 172503 31003 3.4.2.1 Central bank (Rupee Debt Movements; NRG) 1011 0 1011 84 0 84 3.4.2.2 Deposit-taking corporations, except the central bank (NRI Deposits) 195426 161851 33575 203422 172503 30920 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) 242762 229201 13561 510918 510131 787 3.4.3.A Loans to India 208194 193487 14707 202679 209303 -6624 3.4.3.B Loans by India 34569 35714 -1146 308239 300829 7410 3.4.4 Insurance, pension, and standardized guarantee schemes 396 1109 -714 366 783 -417 3.4.5 Trade credit and advances 129710 111126 18583 132199 126052 6147 3.4.6 Other accounts receivable/payable - other 52166 39039 13127 92803 80231 12572 3.4.7 Special drawing rights 0 0 0 0 0 0 3.5 Reserve assets 0 43597 -43597 0 38563 -38563 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 43597 -43597 0 38563 -38563 4 Total assets/liabilities 2205020 2139817 65203 2471694 2441116 30578 4.1 Equity and investment fund shares 1412373 1395681 16693 1336545 1280262 56282 4.2 Debt instruments 740481 661501 78980 1042346 1042060 286 4.3 Other financial assets and liabilities 52166 82636 -30470 92803 118794 -25990 5 Net errors and omissions 6630 0 6630 0 7040 -7040 Note: P: Preliminary. RBI Bulletin October 2025 263CURRENT STATISTICS No. 42: India’s International Investment Position (US$ Million) Item As on Financial Year/Quarter End 2024-25 2024 2025 Jun. Mar. Jun. Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities 1 2 3 4 5 6 7 8 1. Direct investment Abroad/in India 270441 556903 246653 552829 270441 556903 278867 571227 1.1 Equity Capital* 173559 521931 156635 520605 173559 521931 179580 535378 1.2 Other Capital 96882 34972 90018 32224 96882 34972 99287 35849 2. Portfolio investment 15426 272042 12410 277347 15426 272042 16305 272544 2.1 Equity 10391 141938 10665 160898 10391 141938 13111 147392 2.2 Debt 5034 130104 1745 116449 5034 130104 3193 125152 3. Other investment 186700 641155 140909 588623 186700 641155 195426 657723 3.1 Trade credit 33422 131164 32822 125907 33422 131164 33782 131887 3.2 Loan 25891 250109 20803 224491 25891 250109 24464 259789 3.3 Currency and Deposits 79332 167598 57747 160628 79332 167598 82528 171749 3.4 Other Assets/Liabilities 48055 92285 29537 77597 48055 92285 54651 94298 4. Reserves 668326 651997 668326 698118 5. Total Assets/ Liabilities 1140893 1470099 1051969 1418799 1140893 1470099 1188715 1501494 6. Net IIP (Assets - Liabilities) -329206 -366830 -329206 -312779 Note: * Equity capital includes share of investment funds and reinvested earnings. 264 RBI Bulletin October 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 Aug. Jul. Aug. Aug. Jul. Aug. 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 3.88 5.21 4.28 296218030 23205978 32781616 28151946 1.1 Govt. Securities Clearing (1.1.1 to 1.1.3) 17.87 1.62 1.63 1.50 185733719 15544033 19293299 16614170 1.1.1 Outright 10.56 0.99 0.84 0.81 16056018 1468219 1274228 1240951 1.1.2 Repo 4.72 0.41 0.55 0.47 77286611 6391039 8664018 7489700 1.1.3 Tri-party Repo 2.58 0.22 0.24 0.22 92391091 7684775 9355053 7883520 1.2 Forex Clearing 28.06 2.13 3.48 2.69 100639565 6911072 12739681 10788097 1.3 Rupee Derivatives @ 1.46 0.13 0.10 0.10 9844746 750873 748636 749679 B. Payment Systems I Financial Market Infrastructures (FMIs) - - - - - - - - 1 Credit Transfers - RTGS (1.1 to 1.2) 3024.55 237.53 277.67 259.68 201387682 15910436 18863902 16371216 1.1 Customer Transactions 3010.32 236.33 276.46 258.52 181153129 14385410 16624624 14993007 1.2 Interbank Transactions 14.23 1.19 1.21 1.16 20234553 1525025 2239279 1378209 II Retail 2 Credit Transfers - Retail (2.1 to 2.6) 2061014.91 166465.50 212335.07 218816.17 79781976 6408703 7319321 7102303 2.1 AePS (Fund Transfers) @ 3.64 0.31 0.31 0.31 190 13 16 16 2.2 APBS $ 32964.43 2783.25 2705.04 3817.08 554034 35283 42355 66150 2.3 IMPS 56249.68 4533.37 4821.90 4772.62 7139110 577888 631411 597549 2.4 NACH Cr $ 16938.86 1534.87 1628.20 1854.46 1670223 144196 143081 167856 2.5 NEFT 96198.05 7983.23 8500.14 8288.60 44361464 3590588 3993960 3785260 2.6 UPI @ 1858660.25 149630.47 194679.48 200083.10 26056955 2060736 2508498 2485473 2.6.1 of which USSD @ 17.24 1.45 1.59 0.69 185 15 31 7 3 Debit Transfers and Direct Debits (3.1 to 3.3) 21659.95 1774.78 1912.72 1929.02 2208583 177162 217899 214928 3.1 BHIM Aadhaar Pay @ 230.08 19.06 19.95 25.38 6907 576 619 718 3.2 NACH Dr $ 19762.28 1621.10 1753.66 1764.13 2199327 176386 217102 214031 3.3 NETC (linked to bank account) @ 1667.59 134.62 139.11 139.51 2349 199 179 178 4 Card Payments (4.1 to 4.2) 63861.15 5322.94 5982.42 6055.24 2605110 211726 231987 228565 4.1 Credit Cards (4.1.1 to 4.1.2) 47740.76 3900.49 4861.81 4934.43 2109197 168184 193849 191159 4.1.1 PoS based $ 24571.10 2023.95 2432.75 2500.52 795022 63048 70380 72747 4.1.2 Others $ 23169.66 1876.54 2429.06 2433.91 1314175 105136 123469 118412 4.2 Debit Cards (4.2.1 to 4.2.1 ) 16120.39 1422.45 1120.61 1120.80 495914 43542 38138 37406 4.2.1 PoS based $ 11980.33 1061.40 832.19 843.59 332556 29346 23921 24663 4.2.2 Others $ 4140.06 361.05 288.42 277.21 163358 14196 14216 12743 5 Prepaid Payment Instruments (5.1 to 5.2) 70254.08 5466.90 7124.06 7966.16 216751 16555 20758 22253 5.1 Wallets 52898.40 4092.83 5431.45 6246.19 154066 11599 16915 17169 5.2 Cards (5.2.1 to 5.2.2) 17355.68 1374.07 1692.61 1719.97 62686 4956 3842 5083 5.2.1 PoS based $ 8240.14 710.24 660.66 669.51 11512 908 908 1030 5.2.2 Others $ 9115.54 663.82 1031.95 1050.45 51174 4048 2935 4054 6 Paper-based Instruments (6.1 to 6.2) 6095.38 508.49 494.59 446.03 7113350 568848 607504 540025 6.1 CTS (NPCI Managed) 6095.38 508.49 494.59 446.03 7113350 568848 607504 540025 6.2 Others 0.00 – – – – – – – Total - Retail Payments (2+3+4+5+6) 2222885.46 179538.61 227848.86 235212.61 91925771 7382994 8397469 8108073 Total Payments (1+2+3+4+5+6) 2225910.01 179776.13 228126.54 235472.29 293313453 23293430 27261371 24479289 Total Digital Payments (1+2+3+4+5) 2219814.63 179267.64 227631.95 235026.26 286200103 22724582 26653867 23939264 RBI Bulletin October 2025 265CURRENT STATISTICS PART II - Payment Modes and Channels System Volume (Lakh) Value (₹ Crore) FY 2024-25 2024 2025 FY 2024-25 2024 2025 Aug. Jul. Aug. Aug. Jul. Aug. 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 144463.15 180367.99 184421.90 39206221 3182912 3658441 3539374 1.1 Intra-bank $ 110801.96 10667.99 10205.69 10513.87 7207439 614654 634811 605031 1.2 Inter-bank $ 1646174.95 133795.17 170162.30 173908.03 31998782 2568258 3023629 2934344 2 Internet Payments (Netbanking / Internet Browser Based) @ (2.1 to 2.2) 47478.09 3980.06 3987.57 2899.82 131858133 10547357 12803198 7172910 2.1 Intra-bank @ 13056.37 1159.37 935.66 592.15 69086996 5630895 6734105 3104858 2.2 Inter-bank @ 34421.72 2820.69 3051.90 2307.67 62771136 4916461 6069093 4068053 B. ATMs 3 Cash Withdrawal at ATMs $ (3.1 to 3.3) 60308.11 5157.20 4472.41 4625.94 3063077 255021 232955 240098 3.1 Using Credit Cards $ 97.25 8.46 6.63 6.71 5084 434 362 366 3.2 Using Debit Cards $ 59965.70 5128.53 4447.66 4601.37 3046987 253703 231722 238883 3.3 Using Pre-paid Cards $ 245.16 20.20 18.13 17.86 11005 883 871 849 4 Cash Withdrawal at PoS $ (4.1 to 4.2) 3.58 0.30 0.13 0.13 37 3 1 1 4.1 Using Debit Cards $ 3.33 0.28 0.11 0.10 35 3 1 1 4.2 Using Pre-paid Cards $ 0.25 0.02 0.02 0.02 3 0 0 0 5 Cash Withrawal at Micro ATMs @ 11640.55 972.97 996.95 1245.48 296622 23935 25574 31157 5.1 AePS @ 11640.55 972.97 996.95 1245.48 296622 23935 25574 31157 PART III - Payment Infrastructures (Lakh) System As on March 2024 2025 2025 Aug. Jul. Aug. 1 2 3 4 Payment System Infrastructures 1 Number of Cards (1.1 to 1.2) 11006.97 10739.74 11243.50 11303.57 1.1 Credit Cards 1098.85 1054.24 1116.23 1123.14 1.2 Debit Cards 9908.12 9685.49 10127.27 10180.42 2 Number of PPIs @ (2.1 to 2.2) 13396.53 15182.14 13746.53 14584.13 2.1 Wallets @ 8673.62 11322.72 8870.16 9692.18 2.2 Cards @ 4722.91 3859.42 4876.37 4891.95 3 Number of ATMs (3.1 to 3.2) 2.56 2.55 2.49 2.49 3.1 Bank owned ATMs $ 2.20 2.20 2.13 2.12 3.2 White Label ATMs $ 0.36 0.35 0.36 0.36 4 Number of Micro ATMs @ 14.82 14.50 14.67 14.71 5 Number of PoS Terminals 110.98 93.01 119.21 119.73 6 Bharat QR @ 67.18 63.97 66.65 65.97 7 UPI QR * 6579.30 5912.93 6881.22 6978.38 @: 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 Note : 1. Data 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. 266 RBI Bulletin October 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 October 2025 267CURRENT STATISTICS No. 45 : Ownership Pattern of Central and State Governments Securities (Per cent) Central Government Dated Securities 2024 2025 Category Jun. Sep. Dec. Mar. Jun. 1 2 3 4 5 (A) Total (in ₹. Crore) 10946860 11271589 11422728 11642652 11854200 1 Commercial Banks 37.52 37.55 37.98 36.18 35.28 2 Co-operative Banks 1.42 1.35 1.36 1.29 1.29 3 Non-Bank PDs 0.70 0.77 0.65 0.76 0.59 4 Insurance Companies 26.11 25.95 26.14 25.81 25.95 5 Mutual Funds 2.87 3.14 3.11 2.68 2.46 6 Provident Funds 4.41 4.25 4.25 4.24 4.35 7 Pension Funds 4.74 4.86 5.05 4.91 4.96 8 Financial Institutions 0.57 0.63 0.64 0.71 0.74 9 Corporates 1.44 1.60 1.45 1.49 1.26 10 Foreign Portfolio Investors 2.34 2.80 2.81 3.12 2.80 11 RBI 11.92 11.16 10.55 12.78 14.21 12 Others 5.97 5.92 6.01 6.01 6.13 12.1 State Governments 2.13 2.19 2.21 2.25 2.29 State Governments Securities 2024 2025 Category Jun. Sep. Dec. Mar. Jun. 1 2 3 4 5 (B) Total (in ₹. Crore) 5727482 5909490 6055711 6399564 6524417 1 Commercial Banks 33.85 34.39 35.11 35.40 35.54 2 Co-operative Banks 3.38 3.29 3.22 3.08 3.02 3 Non-Bank PDs 0.59 0.60 0.53 0.61 0.60 4 Insurance Companies 25.85 25.56 25.16 24.07 24.12 5 Mutual Funds 2.08 1.93 1.89 1.93 1.84 6 Provident Funds 22.94 23.02 22.90 23.60 23.72 7 Pension Funds 4.87 4.87 4.82 5.07 4.96 8 Financial Institutions 1.58 1.57 1.58 1.48 1.59 9 Corporates 2.03 1.95 1.97 2.05 1.93 10 Foreign Portfolio Investors 0.05 0.04 0.03 0.05 0.02 11 RBI 0.62 0.60 0.58 0.55 0.54 12 Others 2.17 2.18 2.19 2.10 2.12 12.1 State Governments 0.26 0.26 0.26 0.25 0.25 Treasury Bills 2024 2025 Category Jun. Sep. Dec. Mar. Jun. 1 2 3 4 5 (C) Total (in ₹. Crore) 858193 747242 760045 790381 784059 1 Commercial Banks 47.79 44.74 40.45 46.58 42.87 2 Co-operative Banks 1.49 1.58 1.22 2.17 1.80 3 Non-Bank PDs 2.69 2.28 1.41 2.09 1.10 4 Insurance Companies 5.78 5.26 4.73 4.23 4.07 5 Mutual Funds 14.50 15.06 15.41 16.15 15.72 6 Provident Funds 0.60 0.26 0.04 0.20 0.09 7 Pension Funds 0.00 0.00 0.00 0.02 0.00 8 Financial Institutions 6.56 6.36 6.77 7.73 6.31 9 Corporates 4.79 4.66 4.56 4.50 3.77 10 Foreign Portfolio Investors 0.20 0.15 0.12 0.09 0.02 11 RBI 0.00 0.00 0.00 0.00 0.00 12 Others 15.59 19.65 25.29 16.23 24.26 12.1 State Governments 11.55 14.95 20.11 11.23 18.34 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. 268 RBI Bulletin October 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 October 2025 269CURRENT STATISTICS No. 47: Financial Accommodation Availed by State Governments under various Facilities (₹ Crore) During August-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 6651.08 31 1999.66 24 2612.87 9 2 Arunachal Pradesh - - - - - - 3 Assam 1097.02 15 - - - - 4 Bihar - - - - - - 5 Chhattisgarh - - - - - - 6 Goa - - - - - - 7 Gujarat - - - - - - 8 Haryana 666.32 7 - - - - 9 Himachal Pradesh - - 669.03 26 254.47 12 10 Jammu & Kashmir UT 29.70 6 789.89 4 - - 11 Jharkhand 1296.44 30 572.00 8 - - 12 Karnataka - - - - - - 13 Kerala 1691.73 31 1263.18 28 922.52 3 14 Madhya Pradesh - - - - - - 15 Maharashtra - - - - - - 16 Manipur 67.84 30 37.89 11 - - 17 Meghalaya 442.17 31 137.22 8 - - 18 Mizoram 26.74 6 - - - - 19 Nagaland 373.28 31 - - - - 20 Odisha - - - - - - 21 Puducherry - - - - - - 22 Punjab 4866.12 31 1117.60 26 753.17 3 23 Rajasthan 3651.88 27 1877.14 25 - - 24 Tamil Nadu - - - - - - 25 Telangana 5081.47 31 2068.43 27 554.63 17 26 Tripura - - - - - - 27 Uttar Pradesh - - - - - - 28 Uttarakhand 187.19 3 - - - - 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. 270 RBI Bulletin October 2025CURRENT STATISTICS No. 48: Investments by State Governments (₹ Crore) As on end of August 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 12069 1191 0 0 2 Arunachal Pradesh 3062 8 0 6050 3 Assam 7906 94 0 0 4 Bihar 14938 970 0 18000 5 Chhattisgarh 8582 998 0 9630 6 Goa 1171 477 0 0 7 Gujarat 15963 696 0 2000 8 Haryana 2731 1778 0 0 9 Himachal Pradesh - - 0 0 10 Jammu & Kashmir UT 54 54 0 0 11 Jharkhand 3127 - 0 780 12 Karnataka 21109 780 0 54986 13 Kerala 3365 0 0 0 14 Madhya Pradesh - 1329 0 1400 15 Maharashtra 74396 3205 0 0 16 Manipur 72 146 0 0 17 Meghalaya 1329 113 0 0 18 Mizoram 526 84 0 0 19 Nagaland 1973 48 0 0 20 Odisha 19062 2135 0 11636 21 Puducherry 605 - 0 1750 22 Punjab 10465 958 0 0 23 Rajasthan 2911 376 0 5750 24 Tamil Nadu 3587 - 0 2638 25 Telangana 8245 1811 0 0 26 Tripura 1376 31 0 0 27 Uttarakhand 5903 317 0 0 28 Uttar Pradesh 18177 3422 0 15000 29 West Bengal 14669 1077 0 10000 Total 257375 22098 0 139620 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 October 2025 271CURRENT STATISTICS No. 49: Market Borrowings of State Governments (₹ Crore) 2025-26 Total amount 2023-24 2024-25 raised, so far in June July August 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 14000 13000 5600 3300 5000 3800 37172 29172 2 Arunachal Pradesh 902 672 1010 704 - - - - - - - -130 3 Assam 18500 16000 19000 13850 - - 1400 1400 1104 1104 6004 5054 4 Bihar 47612 29910 47546 30890 - - 6000 6000 6000 6000 12000 12000 5 Chhattisgarh 32000 26213 24500 16913 1000 1000 - -700 - - 3970 3270 6 Goa 2550 1560 1050 250 100 100 100 - 300 200 600 100 7 Gujarat 30500 11947 38200 16280 1500 300 3000 3000 3500 2500 16500 7740 8 Haryana 47500 28364 49500 31710 3000 425 3000 945 3000 2000 16000 8470 9 Himachal Pradesh 8072 5856 7359 4725 800 800 1919 1919 1500 1000 6419 5269 10 Jammu & Kashmir UT 16337 13904 13170 11416 705 705 1100 600 1100 650 4705 3255 11 Jharkhand 1000 -2505 3500 -2005 - - - -1000 - - - -1000 12 Karnataka 81000 63003 92025 71525 - -1000 - - - - - -1000 13 Kerala 42438 26638 53666 37966 5000 4000 5000 2500 4988 1988 21988 11988 14 Madhya Pradesh 38500 26264 63400 47206 3277 2277 6800 5300 8800 7300 23877 19877 15 Maharashtra 110000 79738 123000 90917 8000 6500 24000 21000 12000 9000 57500 46500 16 Manipur 1426 1076 1500 1037 - - 250 100 - - 1000 650 17 Meghalaya 1364 912 1882 997 500 430 - -50 300 - 1150 630 18 Mizoram 901 641 1169 939 125 50 100 100 100 100 325 250 19 Nagaland 2551 2016 1550 950 - -100 - - - - - -200 20 Odisha 0 -4658 20780 17780 - - 3000 3000 2000 2000 5000 5000 21 Puducherry 1100 475 1600 880 200 200 - -200 - - 200 - 22 Punjab 42386 29517 40828 32466 4500 2858 5000 4400 1500 - 22300 16058 23 Rajasthan 73624 49718 75185 49479 9500 4938 5500 4000 6000 5000 35100 24038 24 Sikkim 1916 1701 1951 1621 - - - - - - - - 25 Tamil Nadu 113001 75970 123625 89894 13000 9750 7000 5500 8000 5600 39300 23150 26 Telangana 49618 39385 56209 42199 8500 7200 8500 6000 8000 7200 33900 24952 27 Tripura 0 -550 0 -150 - - - -200 - - 800 600 28 Uttar Pradesh 97650 85335 45000 23185 - -3233 3000 1000 3000 2000 12000 -233 29 Uttarakhand 6300 3800 10400 8000 1000 250 1000 1000 - -500 3000 1750 30 West Bengal 69910 48910 76500 54600 7500 6000 5500 4000 5500 4000 18500 11500 Grand Total 1007058 717140 1073310 753345 82207 56449 96769 72914 81692 60942 379310 258709 - : 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. 272 RBI Bulletin October 2025CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Amount in ` Crore) 2022-23 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 287802.7 297217.6 293954.9 451660.3 1330635.4 Per cent of GDP 4.4 4.6 4.3 6.4 4.9 I. Financial Assets 577822.4 632335.6 748109.7 968986.1 2927253.7 Per cent of GDP 8.9 9.8 11.0 13.6 10.9 of which: 1.Total Deposits (a+b) 185429.1 317361.2 280233.1 325852.7 1108876.2 (a) Bank Deposits 163172.4 299532.7 256399.7 307866.8 1026971.5 i. Commercial Banks 158613.3 300565.0 248459.8 284968.0 992606.2 ii. Co-operative Banks 4559.0 -1032.4 7939.8 22898.9 34365.3 (b) Non-Bank Deposits 22256.8 17828.6 23833.5 17985.9 81904.7 of which: Other Financial Institutions (i+ii) 6504.8 2076.7 8081.6 2234.0 18897.1 i. Non-Banking Financial Companies 4230.6 3267.2 3246.9 3945.8 14690.4 ii. Housing Finance Companies 2274.2 -1190.5 4834.7 -1711.8 4206.6 2. Life Insurance Funds 73357.5 151737.1 167581.7 156268.5 548944.9 3. Provident and Pension Funds (including PPF) 146719.1 118171.9 136388.4 216513.6 617793.1 4. Currency 66438.9 -54579.3 76760.1 148990.1 237609.7 5. Investments 51502.6 48530.1 49778.6 64150.6 213961.9 of which: (a) Mutual Funds 35443.5 44484.0 40205.9 58954.5 179087.8 (b) Equity 13560.9 1378.2 6434.1 1664.9 23038.1 6. Small Savings (excluding PPF) 54375.1 51114.5 37367.7 57210.6 200068.0 II. Financial Liabilities 290019.7 335118.0 454154.8 517325.8 1596618.3 Per cent of GDP 4.5 5.2 6.7 7.3 5.9 Loans/Borrowings 1. Financial Corporations (a+b) 289781.5 334879.7 453916.6 517087.5 1595665.3 (a) Banking Sector 234235.0 263450.2 370782.9 383843.2 1252311.4 of which: i. Commercial Banks 230283.8 261265.3 368304.6 331291.0 1191144.8 (b) Other Financial Institutions 55546.4 71429.5 83133.7 133244.3 343353.9 i. Non-Banking Financial Companies 30531.7 36650.3 55791.7 94565.3 217539.1 ii. Housing Finance Companies 22336.7 33031.2 24903.3 36745.8 117017.0 iii. Insurance Corporations 2678.0 1747.9 2438.7 1933.2 8797.8 2. Non-Financial Corporations (Private Corporate Business) 33.7 33.7 33.7 33.7 135.0 3. General Government 204.5 204.5 204.5 204.5 818.0 RBI Bulletin October 2025 273CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Contd.) (Amount in ` Crore) 2023-24 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 349607.1 283994.4 294431.6 666547.4 1594580.4 Per cent of GDP 4.8 3.9 3.8 8.4 5.3 I. Financial Assets 671244.1 810128.8 805066.2 1187279.1 3473718.2 Per cent of GDP 9.3 11.2 10.4 14.9 11.5 of which: 1.Total Deposits (a+b) 266680.3 407948.0 296931.3 406706.9 1378266.4 (a) Bank Deposits 253004.1 501768.5 277432.0 390720.4 1422924.9 i. Commercial Banks 243833.9 502260.7 280096.7 383460.6 1409651.9 ii. Co-operative Banks 9170.2 -492.2 -2664.7 7259.8 13273.0 (b) Non-Bank Deposits 13676.2 -93820.5 19499.4 15986.5 -44658.5 of which: Other Financial Institutions (i+ii) -485.4 -107982.1 5337.7 1824.9 -101304.9 i. Non-Banking Financial Companies 6119.3 4782.3 4895.8 1942.9 17740.3 ii. Housing Finance Companies -6604.7 -112764.4 441.9 -118.0 -119045.2 2. Life Insurance Funds 157301.9 140356.8 160135.2 189267.6 647061.4 3. Provident and Pension Funds (including PPF) 163686.0 148356.1 153435.1 253882.9 719360.2 4. Currency -48636.2 -36700.8 56719.0 146643.8 118025.7 5. Investments 41014.3 72664.6 79238.2 108336.6 301253.8 of which: (a) Mutual Funds 32085.6 55768.8 60134.6 90973.0 238962.1 (b) Equity 3756.7 7146.3 9941.1 8236.1 29080.1 6. Small Savings (excluding PPF) 91197.8 77504.1 58607.4 82441.4 309750.7 II. Financial Liabilities 321637.1 526134.4 510634.6 520731.7 1879137.8 Per cent of GDP 4.5 7.3 6.6 6.5 6.2 Loans/Borrowings 1. Financial Corporations (a+b) 321519.8 526016.2 510516.4 520613.5 1878665.8 (a) Banking Sector 213606.3 868873.9 402647.1 392330.5 1877457.7 of which: i. Commercial Banks 208026.5 875654.0 389898.0 382557.9 1856136.4 (b) Other Financial Institutions 107913.6 -342857.7 107869.2 128283.0 1208.0 i. Non-Banking Financial Companies 81448.8 59683.7 85031.8 100836.5 327000.7 ii. Housing Finance Companies 23784.0 -404294.0 21233.4 25852.9 -333423.7 iii. Insurance Corporations 2680.7 1752.6 1604.0 1593.6 7631.0 2. Non-Financial Corporations (Private Corporate Business) 33.7 34.7 34.7 34.7 138.0 3. General Government 83.5 83.5 83.5 83.5 334.0 274 RBI Bulletin October 2025CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Concld.) (Amount in ` Crore) 2024-25 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 551994.2 496676.1 271043.1 674489.0 1994202.4 Per cent of GDP 7.0 6.3 3.2 7.6 6.0 I. Financial Assets 840665.3 901135.4 689663.5 1129381.1 3560845.4 Per cent of GDP 10.6 11.5 8.1 12.8 10.8 of which: 1.Total Deposits (a+b) 274567.9 403591.4 158320.8 418183.6 1254663.6 (a) Bank Deposits 254885.4 388328.6 141290.0 401577.5 1186081.4 i. Commercial Banks 251171.1 389734.0 147864.7 395337.4 1184107.2 ii. Co-operative Banks 3714.3 -1405.4 -6574.7 6240.0 1974.2 (b) Non-Bank Deposits 19682.4 15262.8 17030.8 16606.1 68582.2 of which: Other Financial Institutions (i+ii) 7461.4 3041.8 4809.8 4385.1 19698.2 i. Non-Banking Financial Companies 6289.7 3230.0 4444.5 4220.0 18184.2 ii. Housing Finance Companies 1171.7 -188.2 365.4 165.1 1514.0 2. Life Insurance Funds 175427.0 178835.2 90159.4 90393.0 534814.6 3. Provident and Pension Funds (including PPF) 170218.2 170219.6 170758.3 281332.6 792528.6 4. Currency 34212.5 -57615.2 70840.8 162236.1 209674.1 5. Investments 120638.2 152637.1 159255.2 103720.8 536251.4 of which: (a) Mutual Funds 106987.0 137618.0 124132.0 97193.0 465930.0 (b) Equity 14448.0 15645.0 36063.1 7410.3 73566.5 6. Small Savings (excluding PPF) 65601.6 53467.4 40329.0 73515.0 232913.0 II. Financial Liabilities 288671.1 404459.3 418620.4 454892.1 1566642.9 Per cent of GDP 3.7 5.2 4.9 5.2 4.7 Loans/Borrowings 1. Financial Corporations (a+b) 288492.4 404280.6 418441.7 454713.3 1565928.0 (a) Banking Sector 205040.4 322147.7 319626.6 387045.6 1233860.3 of which: i. Commercial Banks 208525.3 321241.4 302569.3 379856.5 1212192.4 (b) Other Financial Institutions 83452.0 82132.9 98815.0 67667.7 332067.7 i. Non-Banking Financial Companies 65813.7 65488.7 75764.5 39833.9 246900.8 ii. Housing Finance Companies 15125.2 14233.6 20561.4 25756.8 75677.0 iii. Insurance Corporations 2513.1 2410.7 2489.1 2077.1 9489.9 2. Non-Financial Corporations (Private Corporate Business) 34.7 34.7 34.7 34.7 139.0 3. General Government 144.0 144.0 144.0 144.0 576.0 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 2024-25 and revised estimates for 2022-23 and 2023-24. 3. The preliminary estimates for 2024-25 will undergo revision with the release of first revised estimates of national income, consumption expenditure, savings, and capital formation, 2024-25 by the 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 October 2025 275CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Amount in ` Crore) Item Jun-2022 Sep-2022 Dec-2022 Mar-2023 Financial Assets (a+b+c+d+e+f+g+h) 25621348.1 26423992.1 27187715.6 27844981.1 Per cent of GDP 102.8 102.6 103.3 103.5 (a) Bank Deposits (i+ii) 11843527.1 12143059.7 12399459.4 12707326.2 i. Commercial Banks 10987692.1 11288257.2 11536717.0 11821685.0 ii. Co-operative Banks 855834.9 854802.6 862742.4 885641.2 (b) Non-Bank Deposits of which: Other Financial Institutions 216170.0 218246.7 226328.2 228562.2 i. Non-Banking Financial Companies 74794.2 78061.4 81308.3 85254.0 ii. Housing Finance Companies 141375.8 140185.3 145020.0 143308.2 (c) Life Insurance Funds 5325967.3 5559681.9 5786592.6 5795430.6 (d) Currency 2950343.2 2895763.9 2972524.0 3121514.1 (e) Mutual funds 2048097.3 2260209.7 2355315.8 2367792.5 (f) Public Provident Fund (PPF) 851913.4 858591.1 864730.6 939449.0 (g) Pension Funds 744459.2 796454.0 853412.0 898343.0 (h) Small Savings (excluding PPF) 1640870.6 1691985.1 1729352.9 1786563.5 Financial Liabilities (a+b) 8911860.9 9246740.6 9700657.2 10217744.7 Per cent of GDP 35.8 35.9 36.9 38.0 Loans/Borrowings (a) Banking Sector 7095467.7 7358918.0 7729700.9 8113544.1 of which: i. Commercial Banks 6620073.1 6881338.5 7249643.0 7580934.1 ii. Co-operative Banks 473897.0 476024.8 478486.9 530915.0 (b) Other Financial Institutions 1816393.1 1887822.6 1970956.3 2104200.7 of which: i. Non-Banking Financial Companies 869174.9 905825.3 961617.0 1056182.3 ii. Housing Finance Companies 835181.3 868212.5 893115.8 929861.7 iii. Insurance Corporations 112036.9 113784.8 116223.5 118156.7 276 RBI Bulletin October 2025CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Contd.) (Amount in ` Crore) Item Jun-2023 Sep-2023 Dec-2023 Mar-2024 Financial Assets (a+b+c+d+e+f+g+h) 28754605.9 29637615.0 30737884.8 32025210.0 Per cent of GDP 104.2 104.4 105.0 106.3 (a) Bank Deposits (i+ii) 12960330.3 13462098.8 13739530.7 14130251.1 i. Commercial Banks 12065518.9 12567779.6 12847876.2 13231336.9 ii. Co-operative Banks 894811.4 894319.2 891654.5 898914.3 (b) Non-Bank Deposits of which: Other Financial Institutions 228076.8 120094.7 125432.4 127257.3 i. Non-Banking Financial Companies 91373.3 96155.6 101051.4 102994.3 ii. Housing Finance Companies 136703.5 23939.1 24381.0 24263.0 (c) Life Insurance Funds 6064436.9 6255801.1 6553726.0 6820611.8 (d) Currency 3072877.9 3036177.0 3092896.0 3239539.8 (e) Mutual funds 2626046.1 2829859.3 3156299.3 3387208.3 (f) Public Provident Fund (PPF) 955060.6 960343.6 964851.5 1051376.5 (g) Pension Funds 970016.0 1017975.0 1091276.0 1172651.0 (h) Small Savings (excluding PPF) 1877761.2 1955265.4 2013872.8 2096314.2 Financial Liabilities (a+b) 10539264.5 11065280.7 11575797.1 12096410.5 Per cent of GDP 38.2 39.0 39.6 40.2 Loans/Borrowings (a) Banking Sector 8327150.3 9196024.2 9598671.3 9991001.8 of which: i. Commercial Banks 7788960.6 8664614.6 9054512.6 9437070.5 ii. Co-operative Banks 536409.2 529527.7 542240.6 551852.1 (b) Other Financial Institutions 2212114.2 1869256.5 1977125.7 2105408.7 of which: i. Non-Banking Financial Companies 1137631.1 1197314.8 1282346.6 1383183.0 ii. Housing Finance Companies 953645.7 549351.7 570585.1 596438.0 iii. Insurance Corporations 120837.4 122590.0 124194.0 125787.7 RBI Bulletin October 2025 277CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Concld.) (Amount in ` Crore) Item Jun-2024 Sep-2024 Dec-2024 Mar-2025 Financial Assets (a+b+c+d+e+f+g+h) 33253098.6 34421189.5 34532805.6 35264710.9 Per cent of GDP 107.9 109.6 107.2 106.6 (a) Bank Deposits (i+ii) 14385136.5 14773465.1 14914755.1 15316332.6 i. Commercial Banks 13482508.0 13872242.0 14020106.6 14415444.1 ii. Co-operative Banks 902628.6 901223.2 894648.5 900888.5 (b) Non-Bank Deposits of which: Other Financial Institutions 134718.7 137760.5 142570.3 146955.5 i. Non-Banking Financial Companies 109284.0 112514.0 116958.5 121178.5 ii. Housing Finance Companies 25434.7 25246.5 25611.9 25777.0 (c) Life Insurance Funds 7123527.6 7385938.1 7272871.3 7293099.1 (d) Currency 3273752.3 3216137.1 3286977.8 3449213.9 (e) Mutual funds 3866386.1 4291914.4 4224091.7 4128924.5 (f) Public Provident Fund (PPF) 1059829.5 1063056.1 1064212.0 1157449.2 (g) Pension Funds 1247832.0 1337535.0 1371615.0 1443509.0 (h) Small Savings (excluding PPF) 2161915.8 2215383.2 2255712.2 2329227.2 Financial Liabilities (a+b) 12384902.9 12789183.5 13207625.1 13662338.5 Per cent of GDP 40.2 40.7 41.0 41.3 Loans/Borrowings (a) Banking Sector 10196042.2 10518189.9 10837816.5 11224862.1 of which: i. Commercial Banks 9645595.7 9966837.1 10269406.4 10649262.8 ii. Co-operative Banks 548284.4 549069.4 566104.4 573131.8 (b) Other Financial Institutions 2188860.7 2270993.6 2369808.7 2437476.4 of which: i. Non-Banking Financial Companies 1448996.8 1514485.5 1590250.0 1630083.9 ii. Housing Finance Companies 611563.2 625796.8 646358.2 672115.0 iii. Insurance Corporations 128300.7 130711.4 133200.5 135277.5 Notes : 1. Data as ratios to GDP have been calculated based on the Provisional Estimates of National Income 2024-25, released by NSO on May 30, 2025. 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. 278 RBI Bulletin October 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. 1.1: Notes in Circulation include CBDC-Retail (R) and CBDC-Wholesale (W). 1.4: Cash on Hand with Banks includes CBDC-W. 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 October 2025 279CURRENT 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. 280 RBI Bulletin October 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 October 2025 281CURRENT 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. 282 RBI Bulletin October 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 2024-25 `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. 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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 October 2025 283RREECCEENNTT 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. 284 RBI Bulletin October 2025