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Informist, Friday, Dec. 5, 2025

NEW DELHI - Following are the top 10 announcements by Reserve Bank of India Governor Sanjay Malhotra on Friday in his address at the conclusion of the Monetary Policy Committee's fifth bi-monthly meeting for 2025-26 (Apr-Mar):

INTEREST RATES

The Reserve Bank of India's Monetary Policy Committee lowered the policy repo rate by 25 basis points to 5.25%, in a unanimous decision.

POLICY STANCE

The Reserve Bank of India's Monetary Policy Committee retained the 'neutral' policy stance but external member Ram Singh was of the view that the stance be changed to accommodative. 

GROWTH

The Reserve Bank of India raised its GDP growth projection for 2025-26 (Apr-Mar) to 7.3% from 6.8%. It also scaled up its growth estimates for the last two quarters of the year, with growth in Oct-Dec now seen at 7.0% against 6.4% projected earlier, and that in Jan-Mar expected at 6.5%, against 6.2% earlier. The central bank raised its GDP growth forecast for the first quarter of the next financial year to 6.7% from 6.4%. The RBI gave a GDP growth projection of 6.8% for the September quarter of FY27. 

INFLATION

The RBI cut its headline inflation forecast for the current quarter ending December by 120 basis points to 0.6% and lowered the projection for 2025-26 (Apr-Mar) by 60 bps to 2.0%. Governor Sanjay Malhotra said that underlying inflation pressures are even lower than projected, buoyed by a sharp fall in food prices and limited impact of a rise in prices of some precious metals.

The quarterly break-up of the central bank's latest inflation forecasts is as follows – 0.6% for Oct-Dec and 2.9% for Jan-Mar. It had previously forecast inflation in the third quarter to average at 1.8% and fourth quarter at 4.0%. Malhotra also revised the inflation projection for Apr-Jun FY27 to 3.9% from 4.5%. For Jul-Sept FY27, the central bank projected inflation to average 4%. "The risks are evenly balanced.

LIQUIDITY

System liquidity, as measured by the net position under the Liquidity Adjustment Facility, stood at an average daily surplus of INR 1.5 trillion for the period since the MPC last met in October. In response to the cumulative 100-bps cut in the policy repo rate, the weighted average lending rate of scheduled commercial banks has declined by 69 bps for fresh rupee loans during Feb-Oct. On the deposit side, the weighted average domestic term deposit rate on fresh deposits has declined by 105 bps, while that on outstanding deposits has softened by 32 bps over the same period.

The central bank is committed to provide sufficient durable liquidity to the banking system and continue to assess the durable liquidity requirements of the banking system due to changes in currency in circulation, forex operations, and reserve maintenance.

OPEN MARKET OPERATIONS

After reviewing the liquidity situation and the outlook, the Reserve Bank of India will conduct open market bond purchases of INR 1.00 trillion, along with a three-year dollar-rupee buy-sell swap of $5 billion, in December, to inject durable liquidity into the banking system.

EXTERNAL SECTOR

India's current account deficit moderated to 2.2% of GDP in Jul-Sept from 1.3% of GDP in the corresponding quarter a year ago, driven by robust services exports and strong remittances. In October, merchandise exports contracted year on year, whereas merchandise imports continued to increase for the second consecutive month, resulting in a widening of the trade deficit. India's merchandise exports contracted 11.9% on year to $34.4 billion, while imports rose sharply by 16.6% to $76.0 billion in October. Services exports during the month stood at $35.2 billion, up 2.2%, while services imports increased 2.9% to $17.7 billion. Net services exports grew 1.5% and stood at $17.4 billion. In Jul-Sept, India's services exports grew 8.8% on year, while services imports rose 3.7% with net services exports growing 14.5% during the same period. India's foreign exchange reserves fell by $1.90 bln to $686.2 billion in the week ended Nov. 28.

FOREIGN DIRECT INVESTMENT

India's gross foreign direct investment to India increased in Apr-Sept. Net FDI increased significantly due to a decline in repatriation despite a rise in outflows. Gross FDI flows to India rose 19.4% to $51.8 billion in Apr-Sept from $43.4 billion during the same period a year ago. Net FDI inflows increased a whopping 127.6% to $7.7 billion in first half of 2025-26 from $3.4 billion during the same period a year ago. However, foreign portfolio investment to India recorded net outflows of $0.7 billion so far this financial year due to outflows in the equity segment, he said.

FINANCIAL STABILITY

The system-level financial parameters related to capital adequacy, liquidity, asset quality and profitability of scheduled commercial banks remain robust. Similarly, the system-level parameters of NBFCs, too, are sound, with adequate capital position and improved gross non-performing asset ratios. The total flow of resources to the commercial sector has strengthened, bolstered by greater non-bank intermediation. In the current financial year so far, the total flow of resources was INR 20.1 trillion compared with INR 16.5 trillion in the corresponding period of the previous year. Outstanding credit from bank and non-bank sources increased 13% on year. Bank credit growth, too, has seen an uptick in recent months. Sector-wise data reveals that the growth was supported by sustained lending to retail and service sector segments. Industrial credit growth firmed up, aided by a buoyant credit flow to micro, small and medium enterprises. Large industries also recorded an improvement in credit growth.

CUSTOMER SERVICES AND FINANCIAL INCLUSION

The Reserve Bank of India will continue to focus on improving customer services and has taken several measures in this direction. Re-KYC (Renewal of Know Your Customer), financial inclusion and 'Aapki Poonji, Aapka Adhikar' campaigns are some of the initiatives have been initiated in association with other stakeholders. Further, the RBI has proposed to hold a two-month campaign from Jan. 1 to resolve all grievances pending for more than a month with the RBI Ombudsman, Malhotra said, urging regulated entities to support this initiative. 

End

Compiled by Vaishali Tyagi

Filed by Akul Nishant Akhoury

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