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RBI’s Monetary Policy (February 07, 2025): In A Nutshell

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on February 07, 2025. Here are some of the highlights of the monetary policy announcement.

Rates

 

 Change Rate
Policy repo rate Reduced by 0.25% 6.25%
Standing deposit facility (SDF) rate 6.00%
Marginal standing facility (MSF) rate 6.50%
Bank rate 6.50%

Monetary policy stance

‘Neutral’ and to remain unambiguously focused on a durable alignment of inflation with the target, while supporting growth.

Domestic Economy 

 

 GDP growth projection CPI inflation projection
FY 2024-25 6.4% 4.8%
FY 2025-26 6.7% 4.2%

  • India’s current account deficit (CAD) moderated from 1.3% of GDP in Q2 of last year to 1.2% in Q2 of this year.
  • According to the World Bank, India, with an estimated inflow of USD 129.1 billion, continues to remain the largest recipient of remittances globally in 2024.
  • As on January 31, 2025, India’s foreign exchange reserves stood at USD 630.6 billion, providing an import cover of over 10 months.
  • The Credit Deposit Ratio (CD ratio) for the banking system at the end of January 2025 was at 80.8%, broadly similar to that on September 30, 2024.
  • The theme for Financial Literacy Week starting from February 24, 2025 is "Financial Literacy: Women’s Prosperity" with emphasis on women's role in financial decision-making and household budgeting.

Other measures

  • RBI has issued draft directions on Additional Factor of Authentication (AFA) for cross-border Card Not Present (CNP) transactions. The draft directions require a card issuer to validate AFA for non-recurring cross-border CNP transaction, whenever a request for AFA is raised by the overseas merchant or the overseas acquirer. Cross-border transaction means using the card issued by an Indian issuer for payment to a merchant acquired by an overseas acquirer and involves outflow of foreign exchange.
  • RBI is introducing the 'bank.in' exclusive Internet Domain for Indian banks. This initiative aims to reduce cyber security threats. The Institute for Development and Research in Banking’ Technology (IDRBT) will act as the exclusive registrar. The actual registrations will commence from April 2025. Going forward, it is planned to have an exclusive domain viz., “fin.in” for other non-bank entities in the financial sector.
  • Forward contracts will be allowed in Government securities.
  • The Negotiated Dealing System – Order Matching (NDS-OM) is an electronic trading platform for secondary market transactions in government securities. Access to NDS-OM is, at present, available to regulated entities and to the clients of banks and standalone primary dealers. Non-bank brokers registered with SEBI can now directly access NDS-OM, on behalf of their clients.
  • A working group has been set up under the chairmanship of Shri Radha Shyam Ratho, Executive Director, RBI, to undertake a comprehensive review of trading and settlement timing of markets regulated by RBI. 


References

Reserve Bank of India. (2025, February 07). 'Additional Factor of Authentication (AFA) for cross-border Card Not Present (CNP) transactions - DRAFT'. Retrieved from https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=4600

Reserve Bank of India. (2025, February 07). 'Additional Factor of Authentication (AFA) for cross-border Card Not Present (CNP) transactions – Draft Directions'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=59712

Reserve Bank of India. (2025, February 07). 'Governor’s Statement: February 7, 2025'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=59694

Reserve Bank of India. (2025, February 07). 'Statement on Developmental and Regulatory Policies'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=59693

Reserve Bank of India. (2025, February 07). 'Working Group on ‘Comprehensive review of trading and settlement timings of markets regulated by the Reserve Bank’'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=59695


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