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RBI’s Monetary Policy (August 06, 2025): In A Nutshell

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on August 06, 2025. Here are some of the highlights of the monetary policy announcement.

Rates

 

ChangeRate
Policy repo rateUnchanged5.50%
Standing deposit facility (SDF) rate5.25%
Marginal standing facility (MSF) rate5.75%
Bank rate5.75%

Monetary policy stance

  • Monetary policy stance unchanged as ‘neutral’.

Domestic Economy 

  • Real GDP growth for 2025-26 is projected at 6.5%.
  • CPI headline inflation declined for the eighth consecutive month to a 77-month low (since January 2019) of 2.1% in June, driven primarily by a sharp decline in food inflation. Food inflation recorded its first negative print since February 2019 at (-) 0.2% in June.
  • CPI inflation for 2025-26 is projected at 3.1%.
  • India’s current account deficit (CAD) moderated to 0.6% of GDP in 2024-25 from 0.7% of GDP in 2023-24 due to robust services exports and strong remittances receipts despite higher merchandise trade deficit.
  • As on August 1, 2025, India’s foreign exchange reserves stood at US$ 688.9 billion, sufficient to cover more than 11 months of merchandise imports.
  • An internal Working Group has reviewed RBI’s extant Liquidity Management Framework (LMF), operative since February 2020. The weighted average call rate (WACR) is found to be highly correlated with other overnight money market rates (TREPS and Market Repo) in the collateralised segments. Further, WACR is also found to be effective in transmitting signals to other money market instruments across maturities. Therefore, the Group has recommended continuation of overnight WACR as the operating target of monetary policy. The Group has, inter alia, also recommended to continue with the variable rate auction mechanism for repo and reverse repo operations of various tenors with the objective of maintaining the operating target rate at the policy rate.

Other measures

  • As Jan-dhan Scheme completes 10 years, a large number of accounts have fallen due for re-KYC. The banks are organising camps at Panchayat level from 1st July to 30th September. Apart from opening new bank accounts and re-KYC, the camps will focus on micro insurance and pension schemes for financial inclusion and customer grievance redress.
  • The procedure and documentation for settlement of claims in respect of bank accounts, and articles kept in safe custody or safe deposit lockers of deceased bank customers will be standardised. 
  • To enable retail investors to invest in Treasury bills (T-bills) through systematic investment plans, an auto-bidding facility for T-bills, covering both investment and re-investment options, has been enabled in RBI Retail Direct platform. The new functionality helps investors to mandate automatic placement of bids in primary auctions of T-bills.


References

Reserve Bank of India. (2025, August 06). 'Governor’s Statement: August 6, 2025'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=60958

Reserve Bank of India. (2025, August 06). 'Statement on Developmental and Regulatory Policies'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=60959


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